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3 Significant accounting policies (continued)
Ahold at a glance
Notes to the consolidated
financial statements
Our strategy
Our performance
Governan
Financials
Investors
Ahold Annual Report 2013
The amendments to IAS 19 change the accounting for defined benefit plans and termination
benefits. The most significant changes relate to the accounting for changes in defined benefit
obligations and plan assets. The amendments require the recognition of changes in defined
benefit obligations and in the fair value of plan assets when they occur, and therefore
eliminate the "corridor approach" permitted under the previous version of IAS 19, and
accelerate the recognition of past service costs. All actuarial gains and losses are recognized
immediately through other comprehensive income in order for the net pension asset or liability
recognized in the consolidated balance sheet to reflect the full value of the plan deficit or
surplus. Furthermore, the interest cost and expected return on plan assets used in the previous
version of IAS 19 have been replaced with a "net-interest" amount, which is calculated by
applying the discount rate to the net defined benefit liability or asset. IAS 19 (as revised)
introduces certain changes in the presentation of the defined benefit cost, including more
extensive disclosures. In addition to the IAS 19 amendments, Ahold has changed its
presentation of the net-interest amount to be within net financial expenses, instead of the
previous presentation within operating expenses.
IAS 19 also requires that all administration costs be expensed as incurred. In 2013, Ahold has
prospectively changed the way it accounts for the contributions it makes to prepay
disbursement costs that will be incurred when future benefits are paid to beneficiaries. These
costs were previously included in the defined benefit obligation of the pension plan for the
Netherlands, but will now be expensed as contributions are made.
IFRS 10, "Consolidated financial statements," replaces parts of IAS 27, "Consolidated and
separate financial statements" and SIC 12, "Consolidation - special purpose entities." Under
IFRS 10, the term "subsidiaries" refers to all entities (including structured entities) over which
Ahold has control. Control is defined as Ahold having power over an entity; being exposed to,
or having rights to, variable returns from its involvement with the entity; and having the ability
to affect these returns through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to Ahold. They are deconsolidated from the date that
control ceases. Ahold has applied IFRS 10 retrospectively in accordance with the transition
provisions of IFRS. The adoption of IFRS 10 does not have any effect on Ahold's financial
position or performance.
IFRS 11, "Joint arrangements," replaces IAS 31, "Interests in joint ventures," and SIC 13,
"Jointly controlled entities," and deals with how a joint arrangement, in which two or more
parties have joint control over an entity, should be classified. Under IFRS 11joint
arrangements are classified as joint operations or joint ventures, depending on the rights and
obligations of the parties to the arrangements. Joint ventures under IFRS 11 are required to be
accounted for using the equity method of accounting, whereas jointly controlled entities under
IAS 31 can be accounted for using the equity method of accounting or proportionate
accounting. The adoption of IFRS 11 does not affect Ahold's financial position or
performance, as Ahold did not previously use proportionate consolidation, and there are no
entities previously accounted for under the equity method that should be accounted for on a
line-by-line basis (joint operations) under IFRS 11.
IFRS 12, "Disclosures of interests in other entities," was issued in May 2011, and provides
disclosure requirements on interests in subsidiaries, associates, joint ventures, and
unconsolidated structured entities. In general, the annual disclosure requirements of IFRS 12
are more extensive.
IAS 27, "Separate financial statements," was amended in May 2011 after IFRS 10 was
published. The revised IAS 27 pertains only to the accounting for subsidiaries, associates and
joint ventures in the separate financial statements of the parent company. The adoption of the
amended IAS 27 does not have any financial effect on the separate financial statements, as
the control conclusion has not changed for any of Ahold's investees.
IAS 28, "Investments in associates and joint ventures prescribes the accounting for investments
in associates and sets out the requirements for the application of the equity method when
accounting for investments in associates and joint ventures. Ahold's current equity method
accounting has not been changed as a result of this amendment.
IFRS 13, "Fair value measurement," became effective for the Company as of January 1,
2013. It is applied prospectively. IFRS 13 aims to improve consistency and reduce complexity
by providing a precise definition of fair value and a single source of fair value measurement
and disclosure requirements for use across all IFRSs. The requirements do not extend the use
of fair value accounting but provide guidance on how it should be applied where its use is
already required or permitted by other standards within the IFRSs. Upon the adoption of the
standard, Ahold has recognized the effect of non-performance risk, including the Company's
own credit risk, in the measurements of its financial liabilities at fair value. The adoption of IFRS
13 does not have a significant effect on Ahold's financial position or performance. For more
information about financial instruments and fair value measurements, see Note 30.
Amendments to IAS 36, "Impairment of assets," on the recoverable amount disclosures for
non-financial assets removed certain disclosures of the recoverable amount of CGUs which
had been included in IAS 36 by the issue of IFRS 1 3. The amendment is not mandatory for the
Group until January 1, 2014, however the Company has decided to adopt the amendment
early as of January 1, 2013.
