g)@
Notes to the Consolidated Financial Statements
Goodwill
8.3 Property, plant and equipment
O ^7 Heineken N.V. Report of the Report of the Financial Sustainability Other
O Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
Accounting policies
Goodwill represents the difference between the fair value of the net assets acquired and the transaction
price of the acquisition. Goodwill arising on the acquisition of associates and joint ventures is included in the
carrying amount of the associates and joint ventures.
Goodwill is measured at cost less accumulated impairment losses. Goodwill is allocated to individual or groups of
CGUs for the purpose of impairment testing and is tested annually for impairment. Negative goodwill is recognised
directly in profit or loss as other income. An impairment loss in respect of goodwill can not be reversed.
Brands, customer-related and contract-based intangibles
Brands, customer-related and contract-based intangibles acquired as part of a business combination are
recognised at fair value. Otherwise these acquired intangibles are recognised at cost and amortised over
the estimated useful life of the individual brand, respectively over the remaining useful life of the customer
relationships or the period of the contractual arrangements.
Strategic brands are well-known international/local brands with a strong market position and an established
brand name.
Software, research and development and other intangible assets
Purchased software is measured at cost less accumulated amortisation. Expenditure on internally developed
software is capitalised when the expenditure qualifies as development activities, otherwise it is recognised in
profit or loss when incurred.
Expenditure on research activities, undertaken with the prospect of gaining new technical knowledge, is
recognised in profit or loss when incurred.
Amortisation
Amortisation is calculated over the cost of the asset less its residual value. Intangible assets with a finite life
are amortised on a straight-line basis over their estimated useful lives from the date they are available for use.
The estimated useful lives are as follows:
- Strategic brands 40 - 50 years
- Other brands 15 -25 years
- Customer-related and contract-based intangibles 5 - 30 years
-Re-acquired rights 3 - 12 years
- Software 3 - 7 years
- Capitalised development costs 3 years
The amortisation method, useful lives and residual values are reassessed annually. Changes in useful lives or
residual value are recognised prospectively.
De-recognition of intangible assets
Intangible assets are derecognised when disposed or sold. Gains on sale of intangible assets are presented
in profit or loss as other income (refer to note 6.2); losses on sale are included in amortisation. Goodwill is
derecognised when the related CGU is sold.
Impairment of non-financial assets
At each reporting date HEINEKEN reviews the carrying amounts of its non-financial assets (except for
inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount is estimated.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generate cash inflows from continuing use. The CGU for other non-financial assets is often the operating
company on country level. The recoverable amount of an asset or CGU is the higher of an asset's FVLCD and
VIU. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to
the asset or CGU.
An impairment loss is recognised in profit or loss if the carrying amount of an asset or its CGU exceeds its
recoverable amount. Impairment losses are first allocated to goodwill and intangible assets with an indefinite
useful life. A remaining impairment loss is then allocated to the other assets in the unit on a pro rata basis.
In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date
for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
P,P&E are fixed assets that are owned by HEINEKEN, as well as right of use (ROU) assets under a lease
agreement. Owned and ROU assets are held for use in HEINEKEN's operating activities. Refer to the table
below for the split between owned assets and ROU assets as per balance sheet date:
In millions of
2020
2019
Property, plant and equipment - owned assets
10,606
12,230
Right of use assets
945
1,039
Property, plant and equipment
11,551
13,269
