Note 3
Financial statements - Notes to the consolidated financial statements
3 SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
2005 1
effective for annual periods beginning on or after January 1, 2006. Ahold is currently in the process of evaluating the impact,
if any, of the adoption of these amendments on its financial results or position.
In 2005 the IASB issued an amendment to IAS 1 "Presentation of Financial Statements" ("IAS 1"). The amendment
introduces requirements for all entities to disclose (i) the entity's objectives, policies and processes for managing capital, (ii)
quantitative data about what the entity regards as capital, (iii) whether the entity has complied with any capital requirements
and (iv) if it has not complied, the consequences of such non-compliance. The amendment to IAS 1 is effective for annual
periods beginning on or after January 1, 2007 and has not been early adopted by Ahold. As the amendment to IAS 1 includes
disclosure requirements only, its adoption will not have an impact on Ahold's financial results or position.
In 2005 the IASB issued IFRS 7 "Financial Instruments: Disclosures" ("IFRS 7"). IFRS 7 introduces new requirements with
regards to the information on financial instruments that is given in entities' financial statements. IFRS 7 is effective for annual
periods beginning on or after January 1, 2007. Ahold expects to apply IFRS 7 beginning with 2006. As IFRS 7 includes
disclosure requirements only, its adoption will not have an impact on Ahold's financial results or position.
In October 2005, the Financial Accounting Standards Board (the "FASB") issued FSP No. FAS 13-1 "Accounting for Rental
Costs Incurred during a Construction Period" ("FSP 13-1"). FSP 13-1 requires that rental costs associated with operating
leases that are incurred during a construction period be recognized as rental expense beginning with 2006. Ahold has
historically capitalized rental costs incurred during a construction period under US GAAP as well as IFRS. Ahold will also apply
this new guidance under IFRS beginning with 2006. This voluntary change in accounting policy will be applied prospectively
from the earliest date practicable. Ahold is in the process of evaluating the impact of FSP 13-1 on its financial results or
position.
These consolidated financial statements have been prepared in accordance with IFRS, as adopted by the EU.
A reconciliation of Ahold's consolidated financial position and results under IFRS to the financial position and results under
accounting principles generally accepted in the U.S. ("US GAAP") is provided in Note 37.
Ahold's financial year is a 52- or 53-week period ending on the Sunday nearest to December 31. Financial year 2005
consisted of 52 weeks and ended on January 1, 2006. The comparative financial year 2004 consisted of 53 weeks and ended
on January 2, 2005. Ahold's subsidiaries in Central Europe and its treasury center in Geneva, Switzerland as well as Ahold's
former subsidiaries in Spain and South America use a calendar year end.
The following average exchange rates for the euro against the U.S. dollar have been used to calculate the consolidated
statements of operations, consolidated statements of recognized income and expense and the consolidated cash flow
statements:
AVERAGE EUR/USD RATE
2004
First quarter
1.3071
1.2421
Second quarter
1.2369
1.2082
Third quarter
1.2223
1.2222
Fourth quarter
1.1876
1.3001
The year-end closing rates of the euro against the U.S. dollar used to calculate the consolidated balance sheets were 1.1842
and 1.3558 for 2005 and 2004, respectively.
The financial data of Koninklijke Ahold N.V. (the parent company) are included in the consolidated financial statements.
Therefore, in accordance with section 402, Book 2 of the Netherlands Civil Code, the statements of operations in the parent
company financial statements are presented in condensed form.
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