Balance sheet
Receivables/Loans receivable
Receivables and loans receivable are stated at face value net of provisions for uncollectable amounts deemed necessary.
'Project financing' included under 'Receivables' refers to advances for the construction of projects that are to be sold upon completion after
which they will generally 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 lower.
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 years
Other fixed assets (including renovations) 5-8 years
Interest incurred during construction is capitalized as part of the related asset if the company has financed the construction
Included in the value of 'Buildings' is a revaluation adjustment that Ahold Vastgoed bv recognized in 1988. The revaluation amount is
depreciated over the remaining 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 in terms of business and financial policy can be exercised by Ahold are
stated at their net asset value. The other unconsolidated subsidiaries and affiliates are stated at historical cost unless there is a permanent
decline in value.
Intangible fixed assets
Goodwill including any necessary restructuring provisions paid upon the acquisition of companies is charged directly to stockholders' equity
The 'Lease interests' primarily represents the discounted value of the difference between the fair rental value of comparable stores and the
rentals actually due at the time of acquisition of Group companies or takeover of leases. These assets are amortized over the remaining life
of the lease agreements according to the straight-line method.
'Other intangible fixed assets' mainly comprise payments for rental user rights that are being amortized on a straight-line basis over the
estimated life.
Capitalized lease commitments
This refers to the discounted value of future payments due under capitalized real estate leases. The majority of capitalized lease
commitments relate to real estate in the United States.
Deferred income taxes
Deferred income tax assets and liabilities derive from temporary differences between the fiscal and financial valuation of assets and
liabilities and from loss carry forward facilities available. Deferred income taxes are determined using the prevailing tax rate and are
stated at nominal value. Valuation of a deferred tax asset takes place to the extent that such valuation is deemed possible.
Netting of deferred tax assets and liabilities occurs on a fiscal unity basis. Resulting deferred tax liabilities are included on the balance
sheet under 'Long-term liabilities'; deferred tax receivables are classified in 'Fixed assets'. The liabilities and assets tend to be long-term.
Other provisions
Provisions are established for obligations and risks, whose extent is uncertain at balance sheet date, but can reasonably be estimated.
The provision for pensions reflects commitments for pensions not placed with other funds and has been based on actuarial calculations
The loss reserve is based on forecasts of the ultimate settlement of claims and are subject to uncertainty with respect to future events.
The loss reserve is based on actuarial estimates; reserve amount and the underlying actuarial factors and assumptions are regularly
analyzed. The other provisions are stated at nominal value.
Royal Ahold Annual Report 1999
