IBERSOL | 2019 Annual Report

Consolidated Financial Statements provide relief from other consequences arising from the reform of the interest rate benchmark. The changes are limited in scope. If a hedge relationship fails to meet hedge ac- counting requirements for reasons other than those specified in the amendments, discontinuation of hedge accounting remains necessary. In addition, the amendments clarify that if an entity designates cash flows based on an interest rate benchmark as the item covered in a cash flow hedge, the entity will not assume, for the purpose of measuring the ineffectiveness of the hedge, that the expected replacement of the interest rate benchmark with an alternative reference rate will result in zero cash flow after replacement. Coverage gain or loss should be measured using cash flows based on an interest rate benchmark when applying a present value technique, discounted at a market discount rate that reflects the ex- pectations of market participants about the resulting uncertainty reform. Changes are mandatory for all hedging relationships to which exceptions apply. The changes have an effective date of adoption for annual periods beginning on or after January 1, 2020. Early adoption is permitted. The changes are applied re- trospectively to the hedging relationships existing at the beginning of the reporting period in which the entity first applies the changes and to the gain or loss recogni- zed in comprehensive income at the beginning of the period in which the entity first applies the changes ( that is, even if the reporting period is not an annual period). 2.3 CONSOLIDATION (a) Subsidiaries Shareholdings in companies in which the group directly or indirectly holds more than 50% of the voting rights or has the power to control their financial and ope- rational activities (definition of control used by the group) were included in these consolidated financial statements through the full consolidation method. Equity and net profit of these companies assigned to third-party shareholdings are presented separately in the “non-controlling interests” item in the consolidated statement of financial position and of comprehensive income. The companies included in the fi- nancial statements are listed in Note 5. When losses impute to non-controlling interests exceed the non-controlling interest in a subsidiary company’s equity, the non-controlling interest absorb that difference and any additional losses. The purchase method is used to account the acquisition of subsidiaries that occur- red before 2010. The acquisition cost corresponds to the fair value of the delivered goods, capital issued instruments and liabilities incurred or assumed on the acquisi- tion date. The identifiable acquired assets and the liabilities and contingent liabilities taken into account in a corporate concentration will correspond to the fair value on the acquisition date, regardless of whether there are non-controlling interests. The 216