IBERSOL | 2019 Annual Report

Consolidated Financial Statements Financial assets are derecognised when the Group’s contractual rights to the receipt of its future cash flows expire when the Group has substantially transferred all the risks and rewards associated with its detention or when it retains, but not substan- tially, part of the risks and benefits associated with their detention, the Group has transferred control over the assets. 2.9.3 Impairment Until 31 December 2017, the Group carried out an assessment of the existence of objective evidence of impairment, as set forth in IAS 39, including any impairment resulting from an adverse impact on the estimated future cash flows of the financial asset or group of financial assets and where it can be measured reliably. After January 1, 2018, IFRS 9 establishes a new impairment model based on “expec- ted losses”, which replaces the previous model based on “losses incurred” in IAS 39. In this sense, the Group recognizes impairment losses before there is objective evidence of loss of value arising from a past event. This model is the basis for the recognition of impairment losses on financial instruments whose measurement is measured at amortized cost or at fair value through other comprehensive income. The impairment model depends on the occurrence or not of a significant increase in credit risk since the initial recognition. If the credit risk of a financial instrument has not increased significantly since its initial recognition, the Group recognizes an accumulated impairment equal to the expectation of loss estimated to occur within the next 12 months. If credit risk has increased significantly, the Group recognizes an accumulated impairment equal to the expectation of loss that is estimated to occur until the respective maturity of the asset. Once the event of loss under IFRS 9 (“objective proof of impairment”, in accordance with IAS 39 terminology) has been verified, the accumulated impairment is directly attributed to the instrument in question, and its accounting treatment, based on this similar to that provided for in IAS 39, including the treatment of their interest. The book value of the asset is reduced and the amount of losses recognized in the income statement. If, in a subsequent period, the impairment amount decreases, the amount of impairment losses previously recognized is also reversed in the income statement if the impairment loss is objectively related to the event occurring after the initial recognition. a) Accounts receivable from customers The Group applies the simplified method and records expected loss to maturity for all its accounts receivable, including those that include a significant financial compo- nent. Estimated expected losses were calculated based on the experience of actual losses over a period that, by business or type of customer, were considered statisti- cally significant and representative of the specific characteristics of the underlying credit risk. 224