Notes to the
consolidated
financial statements
continued
3 Significant accounting policies continued
Overview
Business review
Governance
Financials
Investors
Ahold Delhaize Annual Report 2016
Share-based compensation
The grant date fair value of equity-settled share-based compensation plans is expensed, with a corresponding increase in equity, on a straight
line basis over the vesting periods of the grants. The cumulative expense recognized at each balance sheet date reflects the extent to which the
vesting period has expired and the Company’s best estimate of the number of shares that will eventually vest. No expense is recognized for awards
that do not ultimately vest, except for awards where vesting is conditional upon a market condition (e.g., total shareholder return). Those are
treated as vested irrespective of whether or not the market condition is ultimately satisfied, provided that all non-market conditions (e.g., continued
employment) are satisfied.
Income taxes
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.
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.
Non-current assets held for sale and discontinued operations
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 or 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.
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.
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