IBERSOL | 2019 Annual Report

2019 ANNUAL REPORT positive difference between the acquisition cost and the fair value of the group’s stake in the acquired and identifiable net assets is recorded as goodwill. If the ac- quisition cost is less than the fair value of the acquired subsidiary’s net assets, the difference is recognised directly in the consolidated statement of comprehensive income. For the acquisition of subsidiaries that occurred after 1 January 2010 the Group has applied reviewed IFRS 3. Accordingly to witch the purchase method continues to be applied in acquisitions, with some significant changes: (i) all amounts which comprise the purchase price are valued at fair value, with the option of measuring, transaction by transaction, the “interests that do not control” by the proportion of the value of net assets of the acquired entity or the fair value of assets and liabilities acquired. (ii) all costs associated with acquisition are recorded as expenses. (iii) interest held prior to obtaining control is measured at fair value and added to the purchase price for the purposes of applying the purchase method Also has been applied since 1 January 2010 the revised IAS 27, which requires that all transactions with the “non- controlling interest” are recorded in equity, when there is no change in control of the entity, there is no place to record goodwill or gains or losses. When there is a loss of control exercised over the entity, any remaining inte- rest on the principal is measured at fair value, and a gain or loss is recognized in the results of the exercise. Balances and gains arising from transactions between group companies are elimina- ted. Losses not realised are also eliminated, except when the transaction reveals that a transferred asset is subject to impairment. The subsidiaries’ accounting policies are altered whenever necessary to ensure consistence with the group’s policies. (b) Jointly controlled companies The financial statements of jointly controlled companies were included in these con- solidated financial statements by the equity method, under the adoption of IFRS 11, as of the date on which the joint control is acquired. According to this method, these companies’ assets, liabilities, income and costs were included in the annexed con- solidated financial statements in one line in the consolidated statement of financial position and in one line in the consolidated statements of comprehensive income. Transactions, balances and dividends paid among group companies and jointly con- trolled companies are not eliminated in the proportion of the control assigned to the group. The excess acquisition cost compared with the fair value of the identifiable assets and liabilities on the acquisition date of a jointly controlled company is recog- nised as a financial investment. Jointly controlled companies are listed in Note 5. 217

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