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Notes to the consolidated financial statements
3 Significant accounting policies (continued)
Income taxes
Non-current assets held for sale and discontinued operations
Property, plant and equipment
Ahold at a glance I Business review I Governance I Financials I Investors
Income tax expense represents the sum of current and deferred tax. Income tax is recognized in the income
statement except to the extent that it relates to items recognized directly in equity or other comprehensive
income. Current tax expense is based on the best estimate of taxable income for the year, using tax rates
that have been enacted or substantively enacted at the balance sheet date and adjustments for current
taxes payable (receivable) for prior years. Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities and the corresponding tax basis used in the
computation of taxable income. Deferred tax assets and liabilities are generally recognized for all temporary
differences. However, deferred tax liabilities are not recognized if they arise from the initial recognition of
goodwill. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a
transaction other than a business combination that, at the time of the transaction, affects neither accounting nor
taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply in the period when
the liability is settled or the asset is realized.
Deferred tax assets, including deferred tax assets for tax loss carryforward positions and tax credit
carryforward positions, are recognized to the extent that it is probable that future taxable income will be
available against which temporary differences, unused tax losses or unused tax credits can be utilized.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable income will be available to allow all or part of the assets to
be recovered.
Deferred tax assets and liabilities are not discounted. Deferred income tax assets and liabilities are offset
on the balance sheet when there is a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred income taxes relate to income taxes levied by the same fiscal authority.
Current income tax assets and liabilities are offset on the balance sheet when there is a legally enforceable
right to offset and when the Company intends either to settle on a net basis or to realize the asset and settle the
liability simultaneously.
The ultimate tax effects of some transactions can be uncertain for a considerable period of time, requiring
management to estimate the related current and deferred tax positions. The Company recognizes liabilities
for uncertain tax positions when it is more likely than not that additional taxes will be due. These liabilities are
presented as current income taxes payable, except in jurisdictions where prior tax losses are being carried
forward to be used to offset future taxes that will be due; in these instances the liabilities are presented as a
reduction to deferred tax assets.
Ahold
Annual Report 2015
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
through a sale transaction rather than through continuing use. For this to be the case, the asset (or disposal
group) must be available for immediate sale in its present condition and its sale must be highly probable. Non-
current assets (or disposal groups) classified as held for sale are measured at the lower of the asset's carrying
amount and the fair value less costs of disposal. Depreciation or amortization of an asset ceases when it is
classified as held for sale. Equity accounting ceases for an investment in a joint venture or associate when it is
classified as held for sale; instead, dividends received are recognized in the consolidated income statement,
A discontinued operation is a component of the Company that either has been disposed of or is classified
as held for sale, and represents a separate major line of business or geographical area of operations or is
part of a single coordinated plan to dispose of a separate major line of business or geographical area of
operations. Results from discontinued operations that are clearly identifiable as part of the component disposed
of and that will not be recognized subsequent to the disposal are presented separately as a single amount in
the consolidated income statement. Results and cash Rows from discontinued operations are reclassified for
prior periods and presented in the financial statements so that the results and cash Rows from discontinued
operations relate to all operations that have been discontinued as of the balance sheet date for the latest
period presented.
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses. Cost includes expenditures that are directly attributable to the acquisition or construction of an asset and
borrowing costs incurred during construction. Where applicable, estimated asset retirement costs are added
to the cost of an asset. Subsequent expenditures are capitalized only when it is probable that future economic
benefits associated with the item will Row to the Company and the costs can be measured reliably. All other
subsequent expenditures represent repairs and maintenance and are expensed as incurred.
Depreciation is computed using the straight-line method based on the estimated useful lives of the items of
property, plant and equipment, taking into account the estimated residual value. Where an item of property,
plant and equipment comprises major components having different useful lives, each such part is depreciated
separately. The assets' useful lives are reviewed at each balance sheet date and adjusted if appropriate.
The estimated useful lives of property, plant and equipment are:
Land
indefinite
Buildings
30-40 years
Material handling systems (in warehouses)
20-30 years
Building components
7-20 years
Machinery and equipment
5-12 years
Other
3-10 years
Depreciation of assets subject to finance leases and leasehold improvements is calculated on a straight-
line basis over either the lease term (including renewal periods when renewal is reasonably assured) or the
estimated useful life of the asset, whichever is shorter.