Consolidated Financial Statements
2.8.3 Impairment
On each consolidated statement of financial
position, the group checks for objective evi-
dence showing whether any group of financial
assets is subject to impairment. In the event
of equity securities classified as available for
sale, a significant or lasting decrease in the fair
value falling below the cost value is determi-
nant for knowing if there is impairment. If there
is evidence of impairment applicable to finan-
cial assets available for sale, the accumulated
loss – calculated by the difference between the
acquisition cost and the current fair value, mi-
nus any impairment loss of that financial asset
previously recognised in results – is removed
from equity and recognised in the consolidated
statement of comprehensive income. Impair-
ment losses from capital instruments recog-
nised in results are not reversible.
The group complies with the guidelines of IAS
39 (reviewed in 2004) to determine the perma-
nent impairment of investments. This measure
requires that the group valuate, among other
factors, the duration and the extent to which
the fair value of an investment is less than its
cost, the financial health and business outlook
for the subsidiary, including factors such as the
industry’s and sector’s performance, technologi-
cal alterations and flows of operating cash and
financing.
2.9 STOCKS
Stocks are presented at the lowest value be-
tween their cost and the net realisation value. The
cost is calculated using the weighted mean cost.
The net realisation value corresponds to the es-
timated sale price during normal business opera-
tions, minus variable sale costs.
2.10 ACCOUNTS RECEIVABLE FROM CLIENTS AND OTHER DEBTORS
Accounts receivable from clients and other
debtors are initially recognised at the fair value.
Medium and long term debts are subsequently
measured at the amortised cost, using the effec-
tive rate method minus the impairment adjust-
ment. The impairment adjustment of accounts
receivable is determined when there is objective
evidence that the group will not receive all the
owed amounts according to the original condi-
tions of the accounts receivable. The impairment
adjustment value is the difference between the
presented value and the current estimated value
of future cash flows, discounted at the effective
interest rate. The impairment adjustment value
is recognised in the consolidated statement of
comprehensive income.
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