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Notes to the Consolidated Financial Statements
Right of use (ROU) assets
Heineken N.V.
Annual Report 2020
Introduction
Report of the
Executive Board
Report of the
Supervisory Board
Financial
Statements
Sustainability
Review
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 restructuring.
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) and its material scrap value.
Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of items of
P,P&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 P,P&E can be reliably measured. The majority of the P,P&E of
HEINEKEN are owned assets, rather than leased assets.
P,P&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 P,P&E are capitalised and accounted for accordingly. If spare parts do not meet the recognition criteria of
P,P&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 P,P&E refer to note 13.2.
Depreciation and impairments
Depreciation is calculated using the straight-line method, based on the estimated useful life of the asset class.
The estimated useful lives of the main asset classes are as follows:
- Buildings 30 - 40 years
-Plant and equipment 10 -30 years
-Other fixed assets 3 - 10 years
Land and assets under construction are not depreciated. When assets under construction are ready for its
intended use, they are transferred to the relevant category and depreciation starts. All other P,P&E items are
depreciated over their estimated useful live to the asset's residual value.
The depreciation method, residual value and useful lives are reassessed annually. Changes in useful lives or
residual value are recognised prospectively.
HEINEKEN reviews whether indicators for impairment exist on CGU level. When an indicator of impairment
exists, assets are tested for impairment. Impairment losses on assets, other than goodwill, recognised in prior
periods are assessed at each reporting date for any indication of a reversal.
De-recognition of Property, plant and equipment
P,P&E is derecognised when it is scrapped or sold. Gains on sale of P,P&E are presented in profit or loss as
other income (refer to note 6.2); losses on sale are included in depreciation.
Definition of a lease
A contract is or contains a lease if it provides the right to control the use of an identified asset for a period of
time in exchange for an amount payable to the lessor. The right to control the use of the identified asset exists
when having the right to obtain substantially all of the economic benefits from use of that asset and when
having the right to direct the use of that asset.
HEINEKEN as a lessee
At the start date of the lease, HEINEKEN (lessee) recognises a right of use (ROU) asset and a lease liability
on the balance sheet. The ROU asset is initially measured at cost, and subsequently at cost less accumulated
depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability.
For measurement of the lease liability, refer to note 11.3.
HEINEKEN applies the following practical expedients for the recognition of leases:
- The short-term lease exemption, meaning that leases with a duration of less than a year are expensed in the
income statement on a straight-line basis.
- The low value lease exemption, meaning that leased assets with an individual value of €5 thousand or less if
bought new, are expensed in the income statement on a straight-line basis.
HEINEKEN as a lessor
A lease is classified as a finance lease when it transfers substantially all the risks and rewards relating to
ownership of the underlying asset to the lessee. For contracts where HEINEKEN acts as an intermediate
lessor, the subleases are classified with reference to the ROU asset.
