Notes to the Consolidated Financial Statements (continued)
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O O Qs
Introduction Report of the Executive Board Report of the Supervisory Board
Land and buildings include the breweries and offices of HEINEKEN as well as stores, pubs and bars. The plant
and machinery asset class contains all the assets needed in HEINEKEN's brewing, packaging and filling
activities. Other fixed assets mainly consist of returnable packaging materials, commercial fixed assets and
furniture, fixtures and fittings. Refer to note 7.4 for further information on returnable packaging materials
that are included in this category.
Impairment losses
In 2019 an impairment of Property, plant and equipment of €52 million was charged to profit or loss
(2018: €133 million), relating to Asia Pacific and Africa, Middle East Eastern Europe regions.
Right of use (ROU) assets
HEINEKEN leases stores, pubs, offices, warehouses, cars, (forklift) trucks and other equipment in the ordinary
course of business. HEINEKEN has around 30,000 leases with a wide range of different terms and conditions,
depending on local regulations and practice. Many leases contain extension and termination options,
which are included in the lease term if HEINEKEN is reasonably certain to exercise an extension option and
reasonably certain not to exercise a termination option. Refer to the table below for the carrying amount of
ROU assets per asset class per balance sheet date:
In millions of 2019 2018
Land and buildings
807
Equipment
232
Carrying amount ROU assets as at 31 December
1,039
During 2019 €271 million was added to the ROU assets as a result of entering into new leases which did
not exist at the beginning of the year and the remeasurement of existing leases. The depreciation and
impairments of ROU assets during the financial year were as follows:
In millions of
2019
2018
Land and buildings
158
Equipment
80
Depreciation and impairments for ROU assets
238
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019 o
Other Information
Accounting estimates and judgements
Estimates are required to determine the (remaining) useful lives of fixed assets. Useful lives are determined
based on an asset's age, the frequency of its use, repair and maintenance policy, technology changes in
production and expected restructurings.
HEINEKEN estimates the expected residual value per asset item. The residual value is the higher of the
expected sales price (based on recent market transactions of similar sold items) or its material scrap value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of items
of PP&E. HEINEKEN believes that straight-line depreciation most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset.
Significant judgement is required to determine the lease term. The assessment of whether HEINEKEN
is reasonably certain to exercise such options impacts the lease term, which as a result could affect the
amount of lease liabilities and ROU assets recognised.
Accounting policies
Owned assets
A fixed asset is recognised when it is probable that future economic benefits associated with the P,P&E item
will flow to HEINEKEN and when the cost of the RP&E can be reliably measured. The majority of the P,P&E
of HEINEKEN are owned assets, rather than leased assets.
PP&E are recognised at historical cost less accumulated depreciation and impairment losses. Historical cost
includes all costs directly attributable to the purchase of an asset. The cost of self-constructed assets
includes all directly attributable costs to make the asset ready for its intended use. Spare parts that meet the
definition of PP&E are capitalised and accounted for accordingly. If spare parts do not meet the recognition
criteria of PP&E, they are either carried in inventory or consumed and recorded in profit or loss.
Subsequent costs are capitalised only when it is probable that the expenses will lead to future economic
benefits and can be measured reliably. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during
the reporting period in which they are incurred.
For the contractual commitments on ordered PP&E refer to note 13.2.
