IBERSOL | 2019 Annual Report

2019 ANNUAL REPORT The Board of Directors determines the budgeted gross margin based on past per- formance and on its market growth expectations. The average weighted growth rate used is consistent with provisions included in the sector’s reports. The discount rates used after taxes and reflect specific risks related with the assets from a CGU. 2.9 FINANCIAL ASSETS 2.9.1 Classification IFRS 9 introduced a financial asset classification model based on the business model used in its management and on the characteristics of the contractual cash flows, replacing the previously existing requirements that determined the classification in the categories of financial assets of IAS 39 After January 1, 2018, the Group classifies its other financial assets at the time of initial recognition in accordance with the re- quirements introduced by IFRS 9 in the following asset categories. a) Assets measured at amortized cost A financial asset is measured at amortized cost if the objective inherent to the bu- siness model is achieved by collecting the respective contractual cash flows and if the underlying contractual cash flows represent only the payment of principal and interest. Assets classified in this category are initially recognized at fair value and subsequently measured at amortized cost. Loans and accounts receivable from customers are generally held for the purpose of collecting contractual cash flows and it is expected that the underlying contractual cash flows represent only the payment of principal and interest and therefore com- ply with the requirements for measurement at amortized cost provided for in IFRS 9. b) Assets measured at fair value through other comprehensive income A financial asset is measured at fair value through other comprehensive income if the objective inherent to the business model used is achieved either by collecting contractual cash flows or by selling financial assets and (if the underlying contrac- tual cash flows represent The assets classified in this category are initially and sub- sequently measured at their fair value, and the changes in their accounting value are recorded against other comprehensive income, except for the recognition of impair- ment losses, interest and when the financial asset is derecognized, the gain or loss accumulated in other comprehensive income is reclassified to the income statement. c) Assets measured at fair value through profit or loss Financial assets that do not meet the requirements for classification in the situations referred to above are classified and measured at fair value through profit or loss, residual category under IFRS 9. 2.9.2 Recognition and derecognition Acquisitions and disposals of financial assets are recognized on the date of their ne- gotiation, that is, on the date on which the Group undertakes to acquire or dispose of these financial assets. 223