Foreign exchange
Transactions, receivables and liabilities in foreign currencies, resulting from ordinary activities are translated at the
prevailing rates of exchange. The resulting exchange differences are added or charged to the statement of earnings.
In the consolidation, subsidiaries' balance sheets denominated in currencies other than guilders are translated at
the rates of exchange prevailing at the end of the fiscal year; the amounts on the subsidiaries' statements of earnings
i enominated in currencies other than guilders are translated per quarter at an average rate of exchange per quarter
The resulting exchange differences are added or charged directly to stockholders' equity.
The rates of exchange applied for the US dollar (USD) and the Portuguese escudo (PTE) were:
1995 1995 1994 1994
USD PTE 100 USD PTE 100
1.6025 1.0720 1.735S 1.0890
1.6368 1.0749 1.9272 1.1026
1.5673 1.0622 1.8318 1 0859
1.6122 1.0750 1.7500 1.0990
1-5951 1.0665 1.7301 1.0950
Income taxes
1 he income taxes for the vear under review are determined based on the earnings reported in the statement of
earnings, adjusted for permanent differences between income as calculated for financial and tax reporting and the
tax rates prevailing for the said year.
Deferred taxes arising from temporary differences between income as calculated for financial and tax reporting
are balanced and included under 'Provision for deferred income taxes'.
The actual taxes due are included under 'Current liabilities'.
Balance sheet Receivables/Loans receivable
Receivables and loans receivable have been included at face value less provisions for uncollectible amounts deemed
necessary.
1 roject financing included under 'Receivables' refers to advances for the construction of projects that are to be
sold upon completion, after which they generally will be leased back by Ahold.
Inventories
Inventories have been valued at historical cost or manufacturing cost based on the first-in, first-out method or at
their market value if this is lower. A reduction has been made for the risk of obsolescence.
Tangible fixed assets
Valuation takes place on the basis of cost, less depreciation. Depreciation according to the straight-line method is
calculated on the basis of the estimated average life, taking into account the residual value:
Buildings 30-40 years
Machinery and equipment 8 vears
Other fixed assets (including renovations) 8 years
Interest incurred during construction is capitalized as part of the related asset if the company has financed the
construction.
Included in the cost of'Buildings' is a revaluation adjustment which Ahold Vastgoed bv recognized in 1988.
The revaluation amount is depreciated over the life of the related asset.
'Buildings' also includes the capitalized leases for real estate. Amortization takes place according to the straight-line
method in accordance with the length of the agreements.
Investment in unconsolidated subsidiaries and affiliates
The unconsolidated subsidiaries upon which considerable influence can be exercised by Ahold are stated at their
net asset value. I he other unconsolidated subsidiaries and affiliates are stated at historical cost unless there is a
permanent decline in value.
Balance sheet:
Year end rate
Statement of earnings:
1st quarter
2nd quarter
3rd quarter
4th quarter
42 Annual Report 1995 Royal Ahold
