AB InBev Financial Results
incremental borrowing rate specific to the country, term and currency of the contract. In addition, the company considers its
recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the
incremental borrowing rates.
Lease payments include fixed payments, less any lease incentives, variable lease payments that depend on an index or a
rate known at the commencement date, and purchase options or extension option payments if the company is reasonably
certain to exercise these options. Variable lease payments that do not depend on an index or rate are not included in the
measurement of the lease liability and right-of-use asset and are recognized as an expense in the income statement in the
period in which the event or condition that triggers those payments occurs.
A lease liability is remeasured upon a change in the lease term, changes in an index or rate used to determine the lease
payments or reassessment of exercise of a renewal and/or purchase option. The corresponding adjustment is made to the
related right-of-use asset.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or
before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated
depreciation and impairment losses. The right-of-use assets are depreciated starting at the commencement date over the
shorter period of useful life of the underlying asset and lease term (refer to accounting policies I and N).
The lease liability is presented in the 'Interest-bearing loans and borrowings' line and the right-of-use assets are presented
in the 'Property, plant and equipment' line in the consolidated statement of financial position. In addition, the principal portion
of the lease payments is presented within financing activities and the interest component is presented within operating
activities in the consolidated cash flow statement.
The company as lessor
Leases where the company transfers substantially all the risks and rewards of ownership to the lessee are classified as
finance leases. Leases of assets under which all the risks and rewards of ownership are substantially retained by the
company are classified as operating leases. Rental income is recognized in other operating income on a straight-line basis
over the term of the lease.
(K) INVENTORIES
Inventories are valued at the lower of cost and net realizable value. Cost includes expenditure incurred in acquiring the
inventories and bringing them to their existing location and condition. The weighted average method is used in assigning the
cost of inventories.
The cost of finished products and work in progress comprises raw materials, other production materials, direct labor, other
direct cost and an allocation of fixed and variable overhead based on normal operating capacity. Net realizable value is the
estimated selling price in the ordinary course of business, less the estimated completion and selling costs.
Inventories are written down on a case-by-case basis if the anticipated net realizable value declines below the carrying
amount of the inventories. The calculation of the net realizable value takes into consideration specific characteristics of each
inventory category, such as expiration date, remaining shelf life, slow-moving indicators, amongst others.
(L) TRADE AND OTHER RECEIVABLES
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business
and generally due for settlement within 30 days. Trade receivables are recognized initially at the amount of the consideration
that is unconditional unless they contain significant financing components, when they are recognized at the amount adjusted
for the time value of money. The company holds trade and other receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortized cost using the effective interest rate method.
Trade and other receivables are carried at amortized cost less impairment losses. To determine the appropriate amount to
be impaired factors such as significant financial difficulties of the debtor, probability that the debtor will default, enter into
bankruptcy or financial reorganization, or delinquency in payments are considered.
Other receivables are initially recognized at fair value and subsequently measured at amortized cost. Any impairment losses
and foreign exchange results are directly recognized in profit or loss.
(M) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all cash balances and short-term highly liquid investments with a maturity of three months
or less from the date of acquisition that are readily convertible into cash. They are stated at face value, which approximates
their fair value. In the cash flow statement, cash and cash equivalents are presented net of bank overdrafts.
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