Cost of Sales
Selling, General and Administrative Expenses
Segment Reporting
Financial Guarantee
2.4 Significant Use of Estimates, Assumptions and Judgment
Delhaize Group Annual Report 2014 91
The Group generates limited revenues from franchise fees, which are recognized in net sales when the services are
provided or franchise rights used.
For certain products or services, such as the sale of lottery tickets, third party prepaid phone cards, etc., Delhaize Group
acts as an agent and consequently records the amount of commission income in its net sales.
Rental income from investment property is recognized in profit or loss on a straight-line basis over the term of the lease and
included in "Other operating income" (see Note 27).
Interest Income is recognized as interest accrues (using the effective interest method) and is included in "Income from
investments" (see Note 29.2).
Dividend income is recognized when the Group's right to receive the payment is established. The income is included in
"Income from investments" (see Note 29.2).
Cost of sales includes the purchase cost of products sold and all costs associated with getting the products into the retail stores
including buying, warehousing and transportation costs. Finally, cost of sales includes appropriate vendor allowances (see also
accounting policy for "Inventories" above).
Selling, general and administrative expenses include store operating expenses, costs incurred for activities which serve securing
sales, administrative and advertising expenses.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker (CODM), who is responsible for allocating resources and assessing performance of the operating segments (see Note 3).
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the
holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt
instrument. Financial guarantee contracts are recognized initially as a liability at fair value that is likely to be the cash
consideration received, less transaction costs that are directly attributable to the issuance of the guarantee, if any, and
subsequently measured at the higher of the best estimate of the expenditure required to settle the present obligation at the
reporting date and the amount recognized less cumulative amortization.
The preparation of financial statements in conformity with IFRS requires Delhaize Group to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and income and
expenses, which inherently contain some degree of uncertainty. These estimates are based on experience and assumptions
Delhaize Group believes to be reasonable under the circumstances. By definition, actual results could and will often differ from
these estimates. In the past, the Group's estimates generally have not deviated materially from actual results. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the
most significant effect on the amounts in the consolidated financial statements is detailed in, but not limited to, the following
notes:
Note 4.1 - Business combinations;
Notes 6, 7, 8, 11, 14, 19 - Assessing assets for impairment and fair values of financial instruments;
Notes 13, 25 - Accounting for vendor allowances;
Note 20 - Provisions;
Note 21 - Employee Benefits; and
Note 22 - Income Taxes.
