Notes to the consolidated financial statements
3 Significant accounting policies (continued)
New accounting policies effective for 2014
New accounting policies not yet effective for 2014
Ahold at a glance I Business review I Governance I Financials I Investors
using Ahold's cost of debt rate. For these all actuarial gains and losses are recognized in the income
Provisions are recognized when (i) the Company has a present (legal or constructive) obligation as a result of
past events, (ii) it is more likely than not that an outflow of resources will be required to settle the obligation, and
(iii) the amount can be reliably estimated. The amount recognized is the best estimate of the expenditure required
to settle the obligation. Provisions are discounted whenever the effect of the time value of money is significant.
The provision for the Company's self-insurance program is recorded based on claims fled and an estimate of
claims incurred but not yet reported. The provision includes expenses incurred in the claim settlement process
that can be directly associated with specific claims. Other expenses incurred in the claim settlement process
are expensed when incurred. The Company's estimate of the required liability of such claims is recorded on a
discounted basis, utilizing an actuarial method based upon various assumptions that include, but are not limited
to, historical loss experience, projected loss development factors and actual payroll costs.
Restructuring provisions are recognized when the Company has approved a detailed formal restructuring plan
and the restructuring has either commenced or has been announced to those affected by it. Onerous contract
provisions are measured at the amount by which the unavoidable costs to fulfill agreements exceeds the
expected benefits from such agreements.
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
These amendments provide an exception to the consolidation requirement for entities that meet the definition of
an investment entity under IFRS 10 Consolidated Financial Statements. The exception to consolidation requires
investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no
impact on the Group, since none of the entities in the Group qualify to be an investment entity under IFRS 10,
Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32
These amendments clarify the meaning of "currently has a legally enforceable right to set-off" and the criteria
for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments have
no impact on the Group.
Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39
These amendments provide relief from discontinuing hedge accounting when novation of a derivative
designated as a hedging instrument meets certain criteria. These amendments have no impact on the Group
as the Group has not novated its derivatives during the current or prior periods.
Recoverable Amount Disclosures for Non-Financial Assets - Amendments to IAS 36
These amendments remove the unintended consequences of IFRS 13 Fair Value Measurement on the
disclosures required under IAS 36 Impairment of Assets. In addition, these amendments require disclosure
of the recoverable amounts for the assets or cash-generating units (CGUs) for which an impairment loss has
been recognized or reversed during the period. The Group early adopted these disclosure requirements in the
annual consolidated financial statements for the year ended December 29, 2013.
Annual Report 2014
The IASB issued several standards, or revisions to standards that are not yet effective for 2014, but will become
effective in coming years.
IFRS 9, "Financial instruments," addresses the classification, measurement and recognition of financial
assets and financial liabilities. The IASB is adding to the standard as it completes the various phases of
its comprehensive project on financial instruments that are to eventually form a complete replacement for
IAS 39 "Financial Instruments: Recognition and Measurement." Based on Ahold's current financial position,
the Company anticipates that the application of IFRS 9 in the future may have an impact on amounts reported
in respect of the Company's financial assets and financial liabilities. However, it is not practicable to provide a
reasonable estimate of the effect of IFRS 9 until a detailed review has been completed. IFRS 9, as amended in
July 2014, is effective for annual periods beginning on or after January 1, 2018.
Narrow scope amendments to IAS 19, "Employee Benefits," entitled "Defined Benefit Plans: Employee
Contributions (Amendments to IAS 19)," apply to contributions from employees or third parties to defined
benefit plans. The objective of the amendments is to simplify the accounting for contributions that are
independent of the number of years of employee service, for example, employee contributions that
are calculated according to a fixed percentage of salary. The amendments became effective for the
Company as of July 1, 2014, however EU endorsement had not been received as of the balance sheet
date. The adjustment will result in an increase of the defined benefit obligation and a decrease in other
comprehensive income. When IAS 19R became effective for the Company in 2012, the amount relating to
this amendment was €26 million. However, it is not practicable to provide a reasonable estimate of the effect
of the amendment upon adoption date until a detailed calculation has been completed.
IFRS 15, "Revenue from Contracts with Customers," establishes a single comprehensive model for entities to use
in accounting for revenue from contracts with customers. IFRS 15 will supersede the current revenue recognition
guidance including IAS 18 "Revenue," IAS 11 "Construction Contracts," and the related Interpretations when
it becomes effective for annual periods beginning on or after January 1, 2017 Under IFRS 15, an entity
recognizes revenue when (or as) a performance obligation is satisfied, i.e., when "control" of the goods or
services underlying the particular performance obligation is transferred to the customer. More prescriptive
guidance has been added in IFRS to deal with specific scenarios. Furthermore, extensive disclosures are
required by IFRS 15. The Company is in the process of evaluating the full impact of IFRS 15.
Amendments to IFRS 11"Accounting for Acquisitions of Interests in Joint Operations," provide guidance
on how to account for the acquisition of a joint operation that constitutes a business as defined in
IFRS 3 "Business Combinations." Specifically, the amendments state that the relevant principles on accounting
for business combinations in IFRS 3 and other standards should be applied. The amendments to IFRS 11 apply
prospectively for annual periods beginning on or after January 1, 2016. Based on Ahold's current financial
position, the Company does not anticipate that the application of these amendments to IFRS 11 will have a
significant effect on the future consolidated financial statements.
Amendments to IAS 16 and IAS 38, "Clarification of Acceptable Methods of Depreciation and Amortization,"
prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment
and introduce a rebuttable presumption that revenue is not an appropriate basis for amortization of an
intangible asset. Currently the Company uses the straight-line method for depreciation and amortization of