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Notes to the Consolidated Financial Statements (continued)
(e) Changes in accounting policies
3. Significant accounting policies
General
(a) Basis of consolidation
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
HEINEKEN has adopted the following new standards and amendments to standards, including any consequential amendments to other
standards, with a date of initial application of 1 January 2017:
- Disclosure Initiative (amendments to IAS 7)
- Recognition of deferred tax assets for unrealised losses (amendments to IAS 12)
- Annual Improvements to IFRS's 2014-2016 Cycle - amendments to IFRS 12
These changes had no significant impact on the disclosures or amounts recognised in HEINEKEN's consolidated financial statements.
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have
been applied consistently by HEINEKEN entities.
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred
to HEINEKEN. HEINEKEN controls an entity when it has power over the investee, is exposed or has the right to variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity.
HEINEKEN measures goodwill at the acquisition date as the fair value of the consideration transferred plus the fair value of any previously held
equity interest in the acquiree and the recognised amount of any non-controlling interests in the acquiree, less the net recognised amount
(generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised
immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally
recognised in profit or loss.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that HEINEKEN incurs in connection with a
business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is
not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent considerations
are recognised in profit or loss.
Contingent liabilities assumed in a business combination are recognised at fair value even if it is not probable that an outflow will be required
to settle the obligation. After initial recognition and until the liability is settled, cancelled or expired, the contingent liability is measured at the
higher of the amount that would be recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the initial
liability amount.
(ii) Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is
recognised as a result. Adjustments to non-controlling interests arising from transactions that do not involve the loss of control are based on a
proportionate amount of the net assets of the subsidiary.
(iii) Subsidiaries
Subsidiaries are entities controlled by HEINEKEN. HEINEKEN controls an entity when it has power overthe investee, is exposed or has the right
to variable returns from its involvement with the entity and has the ability to affect those returns through its power overthe entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control
ceases. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by HEINEKEN.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests, even if doing so causes the non-
controlling interests to have a deficit balance.
(iv) Loss of control
Upon the loss of control, HEINEKEN derecognisesthe assets and liabilities of the subsidiary, any non-controlling interests and the other
components of equity related to the subsidiary. Any resulting gain or loss is recognised in profit or loss. If HEINEKEN retains any interest in the
previous subsidiary, such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted
investee or as an available-for-sale financial asset, depending on the level of influence retained.
