IBERSOL | 2019 Annual Report

2019 ANNUAL REPORT c) Provisions The group on a periodic basis examines possible obligations arising from past events that should be recognized or disclosed. The subjectivity inherent in determining the probability and amount of internal re- sources required to settle these obligations may result in significant adjustments due to changes in the assumptions used or the future recognition of provisions previou- sly disclosed as contingent liabilities. d) Estimated lifetime and impairment of tangible and intangible assets Tangible and intangible fixed assets are subject to systematic depreciation for the period determined to be their economic useful life. The determination of lifetime period of the assets and the depreciation method to be applied, is essential to de- termine the amount of depreciation to be recognized in the income statement for each year. According to the best judgment of the Board of Directors and considering the prac- tices adopted by companies in the sector internationally these two parameters are set for the assets and business in question. The recoverability of tangible and intangible fixed assets requires the definition of estimates and assumptions by the Management, namely, when applicable, with re- gard to the determination of the value in use in the scope of the impairment tests of the Group’s cash generating units. e) Impairment losses foreseen In applying the expected impairment loss models, the Group assesses the probabili- ty of default and estimated losses in the event of default, as disclosed in note 2.9.3. This evaluation involves relevant estimates by the Group, which are based on a set of historical information and assumptions, which may not be representative of the future uncollectibility of the Group’s debtors. f) Lease term and Incremental financing rates To determine the estimated impacts of adopting IFRS 16, the Group makes estimates on the lease terms and their incremental financing rates, which incorporate specific market and entity risks that require the Group to make relevant judgments and es- timates. 241