IBERSOL | 2019 Annual Report

Consolidated Financial Statements 4. IMPORTANT ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgements are continuously evaluated and are based on past expe- rience and on other factors, including expectations regarding future events that are believed to be reasonably probable within the respective circumstances. The group makes estimates and outlines premises about the future. Generally, ac- counting based on estimates rarely corresponds to the real reported results. Estima- tes and premises that present a significant risk of leading to a material adjustment in the accounting value of the assets and liabilities in the following year are described below: a) Estimated impairment of goodwill The group performs annual tests to determine whether the goodwill is subject to impairment, according to the accounting policy indicated in Note 2.7. Recoverable amounts from the units generating cash flows are determined based on the calcu- lation of utilisation values. Those calculations require the use of estimates (Note 9). The assumptions used are sensitive to changes in macroeconomic indicators and to the business assumptions used by management. Considering the uncertainties re- garding the goodwill recovery value due to the fact that they are based on the best information available at the date, changes in the assumptions could result in impacts in determining the level of impairment and, consequently, in the results. b) Income Tax The group is subject to Income Tax in Portugal, Spain and Angola. A significant jud- gement must be made to determine the estimated income tax. The large number of transactions and calculations make it difficult to determine the income tax during normal business procedures. The group recognises liabilities for additional payment of taxes that may originate from reviews by the tax authorities. When tax audits indicate a final result different from the initially recorded amounts, the differences will have an impact on the income tax and on deferred taxes in the period in which those differences are identified. In Portugal, annual income statements are subject to review and possible adjustment by the tax authorities over a period of 4 years. However, if tax losses are presented, they may be subject to review by the tax authorities for a period of 6 years. In other countries in which the Group operates, these deadlines are different, usually longer. The Board of Directors believes that any corrections to those statements as a result of reviews / inspections by the tax authorities will not have a significant effect on the consolidated financial statements as of December 31, 2019, being certain that the periods up to now have been reviewed by the Tax and Customs Authority 2015, inclusive. 240