IBERSOL Annual Report and Consolidated Accounts 2017

ANNUAL REPORT 2017 Investments in “Loans granted and accounts receivable” are initially recognized at fair value, plus transaction costs, and are subsequently measured at amortized cost using the effective interest rate, less any impairment losses. Investments in “Available-for-sale financial assets” are initially recognized at fair value, plus transaction costs, and are subsequently measured at fair value, except when they are invest- ments in equity instruments for which fair value can not be determined with reliability, and the valuation is maintained at the initial cost less impairment losses. Changes in fair value of available-for-sale financial assets are recognized in equity. When available-for-sale financial assets are sold or are impaired, accumulated adjustments to fair value changes are included in the consolidated statement of comprehensive income, such as gains or losses on financial assets. Financial investments are derecognised when the rights to receive cash from them expire or have been transferred and the Group has transferred substantially all the risks and benefits of its ownership. 2.8.3 Impairment On each consolidated statement of financial position, the group checks for objective evidence 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 determinant for knowing if there is impairment. If there is evidence of impairment applicable to financial assets available for sale, the accumulated loss – calculated by the difference between the acquisition cost and the current fair value, minus any impairment loss of that financial asset previously recognised in results – is removed from equity and recognised in the consolidated statement of comprehensive income. Impairment losses from capital instruments recognised 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, technological alterations and flows of operating cash and financing. The impairment adjustment of accounts receivable is determined when there is ob- jective evidence that the group will not receive all the owed amounts accord- ing to the original conditions of the accounts receivable. The impairment adjust- ment 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 ad- justment value is recognised in the consolidated statement of comprehensive income. 217