Financial statements - Notes to the consolidated financial statements
Note 36
2 Bifurcation of leased land and buildings
IFRS requires that lease transactions, in which land and buildings are combined in one lease contract, are bifurcated into
separate land and building components. The land component is typically classified as an operating lease unless there is an
expected transfer of title at the end of the lease term. The lease classification of the building component is assessed
separately. Under Dutch GAAP, these lease transactions were assessed as a whole. This results in differences in both the
consolidated balance sheets and the consolidated statements of operations.
The land components of finance leases under Dutch GAAP, for which title to the land will not be transferred, are classified
as operating leases under IFRS. Consequently, these land components have been derecognized from the consolidated balance
sheets, with a related adjustment of the finance lease liabilities. In total, property, plant and equipment and non-current
liabilities have decreased by the amounts of EUR 244 and EUR 285, respectively, as of December 29, 2003, resulting in an
increase of group equity by EUR 41 as of that date. As of January 2, 2005, property, plant and equipment and non-current
liabilities decreased by EUR 269 and EUR 308, respectively, resulting in an increase in group equity of EUR 39.
Under Dutch GAAP, depreciation and finance charges were recognized for finance lease contracts containing both a building
and a land component. Under IFRS, the lease payments attributable to the land component are recognized as rent expense.
3 Other real estate related differences
Under IFRS, each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of
the item shall be depreciated separately. Applying this "componentization" approach resulted in adjustments of depreciation
charges recognized under Dutch GAAP before 2004, decreasing Ahold's group equity as of December 29, 2003 by EUR 10
and net income 2004 by EUR 4. These amounts relate to U.S. Foodservice only. Application of the componentization approach
retrospectively for the retail companies is impracticable, because items of property, plant and equipment have not been
recorded in prior periods at the required level of detail that allows for retrospective application. The retail companies
consequently apply the componentization approach prospectively as from January 2, 2005.
Other real estate related differences include an acceleration of depreciation of leasehold improvements compared to
Dutch GAAP.
4 Non-current assets (or disposal groups) and related liabilities held for sale
Ahold early adopted IFRS 5 as of December 29, 2003, prospectively in accordance with the standard's provisions. As a result,
non-current assets (or disposal groups) held for sale and related liabilities are presented as current assets and current
liabilities. In addition, results from discontinued operations are separately presented from results from continued operations
retrospectively, as a separate line item in the consolidated statements of operations. The non-current assets held for sale and
related liabilities were under Dutch GAAP not classified and presented as current assets or liabilities. There was no difference
in the measurement of non-current assets (or disposal groups) held for sale or for continuing use as of December 29, 2003.
Under IFRS, depreciation and amortization of non-current assets (or disposal groups) classified as held for sale is prohibited.
The remeasurement to fair value less costs to sell of non-current assets (or disposal groups) classified as held for sale resulted
in an impairment loss. The combined impact of these effects on consolidated net income for 2004 is as follows:
2004
Reversal depreciation and amortization
Non-current assets held for sale
7
Discontinued operations
122
Adjustments to fair value
(48)
Total
81
180
