g)@
Notes to the Consolidated Financial Statements
4. Changes in accounting policies
(a) Changed accounting policies in 2020
(b) Upcoming changes in accounting policies for 2021
5. General accounting policies
General
(a) Basis of consolidation
(b) Foreign currency
Heineken N.V. Report of the Report of the Financial Sustainability Other
Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
The following notes contain the most significant estimates and judgements:
Particular area involving significant estimates and judgements Note
Significant judgement
Judgement on acting as principal versus agent with 6.1 Operating segments
respect to excise tax expense
Judgement used in the determination of the lease 8.3 Property, plant and equipment and
term and assumptions used in the determination 11.3 Borrowings
of the incremental borrowing rate
Assessment of the recoverability of past tax losses 12.2 Deferred tax assets and liabilities
Significant estimates
Assumptions used in impairment testing 8.1 Impairment testing of Intangible assets
and Property, plant and equipment
Assumptions for discount rates, future pension 9.1 Post-retirement obligations
increases and life expectancy to calculate the
defined benefit obligation
Estimating the likelihood and timing of potential 9.2 Provisions and 9.3 Contingencies
cash flows relating to claims and litigation
The uncertainty around the depth and duration of the COVID-19 pandemic specifically impacted the
assumptions used for impairment testing. Refer to note 8.1.
No new standards and amendments to existing standards, effective in 2020, had a significant impact on
HEINEKEN's consolidated financial statements.
No new standards and amendments to existing standards, effective in 2021, will have a significant impact
on HEINEKEN 's consolidated financial statements.
The accounting policies described in these consolidated financial statements have been applied consistently
to all periods presented in these consolidated financial statements.
The consolidated financial statements are prepared as a consolidation of the financial statements of the
Company and its subsidiaries. Subsidiaries are entities controlled by 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 that entity and has the ability to affect those returns through its power over the entity. Control is
generally obtained by ownership of more than 50% of the voting rights.
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.
On consolidation, intra-HEINEKEN balances and transactions, and any unrealised gains and losses or income
and expenses arising from intra-HEINEKEN transactions, are eliminated. Unrealised gains arising from
transactions with associates and JVs (refer to note 10.3) are eliminated against the investment to the extent
of HEINEKEN's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is no evidence of impairment.
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of HEINEKEN
entities using the exchange rates at transaction date. Receivables, payables and other monetary assets
and liabilities denominated in foreign currencies are re-translated to the functional currency using the
exchange rates at the balance sheet date. Resulting foreign currency differences are recognised in the
income statement, except for foreign currency differences arising on re-translation of Fair Value through
Other Comprehensive Income (FVOCI) investments and financial liabilities designated as a hedge of a net
investment, which are recognised in other comprehensive income.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
re-translated to the functional currency at the exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured at cost are translated into the functional
currency at the exchange rate at transaction date.
