IBERSOL Annual Report 2018

ANNUAL REPORT 2018 2.2. ADOPTION OF NEW ACCOUNTING POLICIES The Group adopted for the first time, on 1 January 2018, the new IFRS 15 - Customer contracts, IFRS 9 - Financial instruments and IFRIC 22 - Transactions in foreign cur- rency and the payment of advances. 2.2.1 IFRS 15 - Customer contract awards The IASB issued, on May 28, 2014, the IFRS 15 - Revenue from contracts with cus- tomers. IFRS 15 was adopted by European Commission Regulation 1905/2016 of 22 September 2016. It is mandatory for periods beginning on or after 1 January 2018. This standard removes IAS 11 - Construction contracts, IAS 18 - Revenue, IFRIC 13 - Customer Loyalty Programs, IFRIC 15 - Agreements for the Construction of Real Estate, IFRIC 18 - Transfers of Assets from Customers and SIC 31 Revenue - Direct Exchange Transactions Involving Advertising Services. IFRS 15 determines a model based on 5 steps of analysis in order to determine when the revenue should be recognized and what the amount. The model specifies that revenue must be recognized when an entity transfers goods or services to the customer, measured by the amount that the entity expects to be entitled to receive. Depending on the fulfillment of some criteria, the revenue is recognized: i) At the precise moment, when the control of the goods or services is trans- ferred to the client; or ii) Over the period, insofar as it retracts the performance of the entity. IFRS 15 applies to all revenue arising from contracts with customers (except for contracts covered by other standards), implying amendments to several IAS / IFRS / IFRIC / SIC and the repeal of IAS 11 and 18, IFRIC 13 , 15 and 18 and SIC 31. The fundamental principle of the new standard is that an entity must recognize the revenue to represent the transfer to customers of promised goods or services in an amount that reflects the consideration that the entity expects to receive in exchange for such goods or services, establishing a five-step methodology for the recognition of revenue: Step 1 - Identify the contract with the client; Step 2 - Identify performance obligations; Step 3 - Determine the price of the transaction; Step 4 - Allocate the price of the transaction to its performance obligations; Step 5 - Recognition of revenue (when a performance obligation is met). From the application of the methodology to contracts with customers, the follow- ing was concluded: 213