Financial statements - Notes to the consolidated financial statements
Note 37
Total
402 6,234
- 16
(4) (74)
(2) (158)
(396) (397)
- (445)
5,176
5,176
41
(3)
(15)
686
Closing carrying amount
2,831
19
122
45
319
2,549
- 5,885
1 In 2005 the Company adjusted the 2004 opening balance to correct the tax effecting of certain items that resulted from the 2002 purchase accounting adjustments related to
the acquisition of Alliant by U.S. Foodservice. The effect of the adjustment resulted in a EUR 20 increase and decrease of U.S. Foodservice goodwill and deferred tax asset,
respectively, under IFRS and US GAAP. This adjustment has no impact on consolidated net income or shareholders' equity.
2 Other intangible assets
Recognition and measurement
Pursuant to the exemption available under IFRS 1, the Company elected not to restate the carrying amount of other intangible
assets with indefinite lives arising from business combinations from its previous balance under Dutch GAAP.
Differences between US GAAP and IFRS relate to the carrying value of certain brand names and customer relationships
recorded upon the completion of business combinations that were recorded under US GAAP prior to December 30, 2001 and
charged directly through equity or recorded as part of goodwill under Dutch GAAP. Under US GAAP, through December 30,
2001, brand names were amortized over a period not exceeding 40 years. Upon adoption of SFAS No. 142 on December 31,
2001, the Company re-assessed the useful lives of its other intangible assets and deemed its brand names to have an indefinite
useful life as defined in SFAS No. 142. Accordingly, brand names are no longer amortized under US GAAP after December 31,
2001. IFRS requires the application of a similar policy to account for intangible assets since the IFRS transition date.
Intangibles related to customer relationships are amortized over the estimated duration of the relationship under IFRS and
US GAAP.
Impairment
Reconciling items related to impairment arise based on differences in the initial measurement of other intangible assets upon
completion of a business combination as described above and the impairment test itself. The impairment test under IFRS
consists of comparing the carrying amount of an asset to its recoverable amount, which is the higher of the fair value less
costs to sell and the value in use of the asset. The excess of the carrying amount over the recoverable amount is recorded as
impairment. Under US GAAP, the impairment test for intangible assets subject to amortization is conducted in two steps.
The first step is to compare the carrying amount to undiscounted future cash flows. If the carrying amount is higher than the
sum of the undiscounted cash flows, the second step is to calculate the impairment based on discounted cash flows expected
from the use and eventual disposition of the asset. For intangible assets not subject to amortization, the impairment test
consists of a comparison of the fair value of the intangible assets to its carrying amount. If the carrying amount of the
intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
The US GAAP goodwill balances by business segment are as follows:
Stop
Shop/
Giant
Landover
Opening balance January 2, 2005
Opening carrying amount
Acquisitions
Purchase accounting adjustments
Impairment losses
Classified as held for sale or sold
Exchange rate difference
2,712
(12)
(228)
Giant-
Carlisle/
Tops
183
Schuitema
(156)
(10)
101
8
22
3
(1)
(1)
315
5
U.S. Food
service 1
2,499
(58)
Closing carrying amount
(206)
320 2,235
Year ended January 1, 2006
Opening carrying amount 2,472
Acquisitions -
Impairment losses -
Classified as held for sale or sold -
Exchange rate difference 359
17
109
14
(1)
23
20
320
1
(2)
2,235
6
(15)
323
190
