Food Lion 2011 Annual Report Download - page 74

72 // DELHAIZE GROUP FINANCIAL STATEMENTS ’11
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at
the dates of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the
exchange rate at the date when the fair value is determined and gains or losses are included in the income statement except
for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized
directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognized directly in
equity.
• Foreign group entities: The results and balance sheets of all Group entities that have a functional currency different from the
Group’s presentation currency are translated into the presentation currency as follows:
(a) the balance sheets of foreign subsidiaries are converted to euros at the year-end exchange rate (closing exchange
rate);
(b) goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing exchange rate; and
(c) the income statements are translated at the average daily exchange rate (i.e., the yearly average of exchange rates on
each working day).
The differences arising from the use of the average daily exchange rate for the income statement and the closing exchange
rate for the balance sheet are recorded in the “Cumulative translation adjustment” being part of “Other Comprehensive
Income” (OCI). On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is
recognized in the income statement (as a “reclassification adjustment”).
None of the Group entities has the currency of a hyper-inflationary economy nor does Delhaize Group currently hedge net
investments in foreign operations.
(in EUR)
Closing Rate Average Daily Rate
Country 2011 2010 2009 2011 2010 2009
1 USD U.S. 0.772857 0.748391 0.694155 0.718391 0.754318 0.716949
100 RON Romania 23.130479 23.463163 23.605505 23.589913 23.740563 23.585462
1 BGN Bulgaria 0.511292 — — 0.511292 — —
100 RSD Serbia 0.955657 — — 0.980873 — —
100 ALL Albania 0.719787 — — 0.713878 — —
1 BAM Bosnia &
Herzegovina
0.511292 — — 0.511292 — —
100 IDR
Indonesia
0.008524 0.008332 0.007339 0.008192 0.008304 0.006923
Intangible Assets
Intangible assets include trade names, customer relationships and favorable lease rights that have been acquired in business
combinations (unfavorable lease rights are recognized as “Other liabilities” and released in analogy with SIC 15 Operating
Leases - Incentives), computer software, various licenses and prescription files separately acquired. Separately acquired
intangible assets are initially recognized at cost, while intangible assets acquired as part of a business combination are
measured initially at fair value (see “Business Combinations and Goodwill”). Intangible assets acquired as part of a business
combination that are held to prevent others from using them (“defensive assets”) - often being brands with no intended future
usage - are recognized separately from goodwill.
Expenditures on advertising or promotional activities, training activities and start-up activities, and on relocating or reorganizing
part or all of an entity are recognized as an expense as incurred, i.e., when Delhaize Group has access to the goods or has
received the services in accordance with the underlying contract.
Intangible assets are subsequently carried at cost less accumulated amortization and accumulated impairment losses.
Amortization begins when the asset is available for use as intended by management. Residual values of intangible assets are
assumed to be zero and are reviewed at each financial year-end.
Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs
that are directly attributable to the design and testing of identifiable and unique “for-own-use software” controlled by the Group
are recognized as intangible assets when the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use it;
• there is an ability to use the software product;