## 5.1  SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS 

## PURCHASE PRICE ALLOCATION 

For acquisitions of entities, the assets, liabili- ties and contingent liabilities of the acquiree are recognised using the acquisition method. The most significant assets acquired generally comprise goodwill, trademarks, non-current assets, receivables and inventories. 

No active market exists for the majority of the acquired assets and liabilities, in particular in respect of acquired intangible assets. Accord- ingly, management makes estimates of the fair value of acquired assets, liabilities and contingent liabilities. Depending on the nature of the item, the determined fair value of an item may be associated with uncertainty and possibly adjusted subsequently. 

The unallocated purchase price (positive amount) is recognised in the statement of financial position as goodwill, which is allocated to the Group’s cash-generating units. Management makes estimates of the acquired cash-generating units, the cash- generating units that already existed in the Group and the allocation of goodwill. The allocation of goodwill is based on the expected future cash flows for each activity. In each business combination, management decides whether or not to recognise goodwill related to non-controlling interests. If such goodwill is recognised, it is estimated based 

on the fair value of the non-controlling inter- ests less the non-controlling interests’ share of the fair value of acquired assets, liabilities and contingent liabilities. The fair value of the non-controlling interests is estimated based on the net present value of expected future cash flows from the entity, the cost of newly acquired shareholdings in the entity excluding a control premium paid, and other fair value models as applicable for the transaction. 

In a step acquisition, the Group gains control of an entity in which the Group already held a shareholding immediately before the step acquisition. Management estimates the total fair value of the shareholding in the entity held immediately after the completion of the step acquisition. The estimated total fair value is accounted for as the cost of the total shareholding in the entity. The shareholding held immediately before the step acquisition is remeasured at fair value at the acquisition date. The fair value is calculated as the esti- mated total fair value less the fair value of the consideration paid for the shareholdings ac- quired in the step acquisition and the fair value of non-controlling interests. The resulting gain or loss on the remeasurement is recognised in the income statement under special items. 

The total fair value is based on various valuation methods, including the net present 

value of expected future cash flows from the entity, the cost of newly acquired sharehold- ings in the entity including a control premium paid, and other fair value models as applic- able for the transaction. 

The net present value of expected future cash flows (value in use) is based on budgets and business plans for the next three years and projections for subsequent years as well as management’s expectations for the future development following gain of control of the business. Key parameters are revenue growth, operating margin, future capital expenditure and growth expectations beyond the next three years. Budgets and business plans for the next three years are based on concrete commercial initiatives. Projections for the fol- lowing years (up to seven years) are based on more general expectations and risks for the entity and assumptions about the market in which it operates. As the risk associated with cash flows is not included in the expected cash flows for newly acquired entities, the ex- pected future cash flows are discounted using a WACC rate, cf. the description below. 

Management believes that the purchase price accounted for in the consolidated financial statements reflects the best estimate of the total fair value of the business and the fair value of the non-controlling interests, and 

hence the allocation of goodwill to controlling and non-controlling interests. 

## TRADEMARKS 

The value of the trademarks acquired and their expected useful life are assessed based on the trademarks’ market posi- tion, expected long-term developments in the relevant markets and the trademarks’ profitability. The estimated value of acquired trademarks includes all future cash flows associated with the trademarks, including the value of customer relations etc. related to the trademarks. For most entities ac- quired there is a close relationship between trademarks and sales. Consumer demand for beer and other beverages drives sales, and therefore the value of a trademark is closely linked to consumer demands, while there is no separate value attached to customers (shops, bars etc.) as their choice of products is driven by consumer demand. 

Management determines the useful life for each trademark based on its relative local, regional and global market strength, market share and the current and planned market- ing efforts which are helping to maintain and increase the value of the trademark. When the value of a well-established trademark is expected to be maintained for an indefinite period in the relevant markets, and these 

