Note 35
Financial statements - Notes to the consolidated financial statements
1. Goodwill
Recognition and measurement
Pursuant to the exemption available under IFRS 1, the
Company elected not to restate the carrying amount of
goodwill arising from business combinations completed
prior to December 29, 2003 from its previous balance under
Dutch GAAP. Under Dutch GAAP, goodwill was charged
directly to shareholders' equity upon acquisition until
November 30, 2000, after which date goodwill was
capitalized and amortized on a straight-line basis over a
period not exceeding 20 years. Under US GAAP, goodwill
was capitalized and amortized on a straight-line basis over
a period not exceeding 40 years with respect to business
combinations completed prior to June 30, 2001. Effective
2002, goodwill is no longer amortized but rather tested for
impairment based on triggering events and at least annually.
Impairment
Reconciling items related to impairment arise based on
differences in the initial recognition and measurement of
goodwill upon completion of a business combination as
described above and the impairment test itself. Under IFRS,
The US GAAP goodwill balances by segment are as follows:
impairment testing is conducted by comparing the carrying
amount of a cash-generating unit to which goodwill is
allocated to its recoverable amount, which is measured by
using the higher of the fair value less costs to sell or the value
in use of the asset. Under US GAAP, the impairment test is
comprised of two steps. The initial step is designed to
identify potential goodwill impairment by comparing an
estimate of the fair value of a reporting unit to its carrying
amount including goodwill. If the carrying amount exceeds
the fair value of the reporting unit, a second step is
performed, which compares the implied fair value of the
applicable reporting unit's goodwill with the carrying amount
of that goodwill, to measure the amount of goodwill
impairment, if any.
In 2006, goodwill impairment losses under US GAAP were
EUR 2 lower than under IFRS. In 2005, goodwill impairment
losses under US GAAP were EUR 17 lower than under IFRS,
mainly related to Tops. This goodwill had already been fully
impaired in 2004 under US GAAP. In 2004 additional
goodwill impairment losses under US GAAP were recognized
for EUR 156 related to Tops and EUR 2 related to other.
Stop
Shop/
Giant-
Giant-
Carlisle/
Albert
Central
Other
U.S.
Landover
Tops
Heijn
Europe
Schuitema
retail
Foodservice
Total
Year ended 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)
183
(156)
(10)
101
22
(1)
(1)
315
402
(4)
(2)
(396)
2,499
(58)
6,234
16
(74)
(158)
(397)
(206) (445)
Closing carrying amount
2,472
17
109
23
320
2,235 5,176
Year ended January 1, 2006
Opening carrying amount
Acquisitions
Impairment losses
Classified as held for sale or sold
Exchange rate difference
2,472
359
17
109
14
(1)
23
20
320
1
(2)
2,235 5,176
6 41
(3)
(15) (15)
323 686
Closing carrying amount
2,831
19
122
45
319
2,549 5,885
Year ended December 31, 2006
Opening carrying amount
Acquisitions
Classified as held for sale or sold
Exchange rate difference
2,831
(291)
19
46
(3)
122
100
(1)
45 319
2 14
(4)
3
2,549 5,885
162
(5)
(262) (553)
Closing carrying amount
2,540
62
221
50
329
2,287 5,489
118 Ahold Annual Report 2006
