Financial statements - Notes to the consolidated financial statements
Note 37
In March 2005, the FASB issued FASB Interpretation (FIN) No. 47, "Accounting for Conditional Asset Retirement Obligations,
An Interpretation of FASB Statement No. 143," ("FIN No. 47") which requires an entity to recognize a liability for the fair
value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. The
adoption of this interpretation did not have a material impact on Ahold's consolidated financial position, results of operations
or cash flows.
In December 2004, the FASB issued SFAS No. 123R, "Share-based Payments" ("SFAS No. 123R"). SFAS No. 123R revises
SFAS 123, "Accounting for Stock-Based Compensation," and supersedes Accounting Principles Board ("APB") APB Opinion
No. 25, "Accounting for Stock Issued to Employees." In January 2005, the SEC issued Staff Accounting Bulletin No. 107,
which provides supplemental implementation guidance for SFAS No. 123R. In April 2005, the SEC extended the compliance
date of SFAS 123R, with the result that this standard will be effective for the Company beginning with the first quarter of
2006. SFAS No. 123R applies to transactions in which an entity exchanges its equity instruments for goods or services and
also applies to liabilities an entity may incur for goods or services that are based on the fair value of those equity instruments.
Under SFAS No. 123R, the Company will be required to select a valuation technique, or option-pricing model that meets the
criteria as stated in the standard. Allowed valuation models include a binomial model and the Black-Scholes model.
The Company is in the process of assessing the impact of the adoption of SFAS No. 123R for its effect on prospective option
grants. The adoption of SFAS No. 123R requires the Company to value share options granted prior to its adoption of SFAS No.
123 under the fair value method and expense these amounts in the statement of operations over the share option's remaining
vesting period. In addition, SFAS No. 123R will require the Company to reflect the tax savings resulting from tax deductions in
excess of the expense reflected in its financial statements as a financing cash flow, which could impact the Company's future
reported cash flows from operating activities.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, An Amendment of Accounting Research Bulletin (ARB)
No. 43, Chapter 4" ("SFAS No. 151"). SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight,
handling costs and spoilage should be expensed as incurred and not included in overhead expenses. Further, SFAS No. 151
requires that allocation of fixed and production facilities overheads to conversion costs should be based on the normal capacity
of the production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred during financial periods
beginning after June 15, 2005. The Company does not believe that the adoption of SFAS No. 151 will have a significant effect
on its future consolidated financial statements.
In November 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary AssetsAn Amendment of APB No. 29"
("SFAS No. 153"). The provisions of SFAS No. 153 are effective for asset exchanges occurring in financial periods beginning
after June 15, 2005. SFAS No. 153 eliminates the exception to the fair value requirements, which applied to exchanges of
similar productive assets and replaces it with a general exception for exchange transactions that do not have commercial
substance (i.e., transactions that are not expected to result in significant changes in the cash flows of the reporting entity).
The Company does not believe that the adoption of SFAS No. 153 will have a significant effect on its future consolidated
financial statements.
In March 2004, the FASB's EITF reached a consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments," ("EITF 03-1"). EITF 03-1 prescribes a three-step model for
determining whether an investment is other-than-temporarily impaired and requires disclosures about unrealized losses on
investments. This accounting guidance became effective for reporting periods beginning after June 15, 2004, while the
disclosure requirements became effective for annual reporting periods ending after June 15, 2004. In September 2004, the
FASB issued FASB Staff Position ("FSP") EITF 03-1-1, "Effective Date of Paragraphs 10-20 of EITF No. 03-1 The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments," ("FSP EITF 03-1-1"). FSP EITF 03-1-1
delayed the effective date for the measurement and recognition guidance contained in paragraphs 10-20 of EITF Issue 03-1.
In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1, "The Meaning of Other-Than-Temporary Impairment
and its Application to Certain Investments." This FSP addresses the determination as to when an investment is considered
impaired, whether the impairment is other-than- temporary and the measurement of an impairment loss. This statement
specifically nullifies the requirements of paragraphs 10-18 of EITF 03-1 and makes references to existing other-than-
temporary impairment guidance. The guidance under this FSP is effective for reporting periods beginning after December 15,
2005 and the Company continued to apply relevant other-than-temporary guidance as provided for in FSP EITF 03-1-1 during
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