IBERSOL | Annual Report 2020

Consolidated Financial Statements influence the decisions that primary users of general financial statements will make based on those same financial statements, that provide financial information for a particular reporting entity.”. The adoption of this standard did not impact the Group’s financial statements. c) Amendment to Interest Rate benchmarks (changes to IFRS 9, IAS 39 and IFRS 7) On 26 September 2019, the IASB issued amendments to IFRS 9, IAS 39 and IFRS 7. The amendments modify certain specific hedge accounting requirements to miti- gate the potential effects of the uncertainty caused by the IBOR reform. In addition, the changes require companies to provide additional information to investors about their hedging relationships, which are directly affected by these uncertainties. The amendments provide exceptions for entities to apply hedge accounting re- quirements, assuming that the interest rate benchmark on which the hedged risk or the hedged cash flows of the hedged item or the cash flows of the hedge instru- ment is based, is not changed as a result of the IBOR reform. The proposed excep- tions apply only to hedge accounting requirements and the amendments do not provide relief from other consequences arising from the reform of the interest rate benchmark. The changes are limited in scope. If a hedge fails to meet hedge accounting require- ments for reasons other than those specified in the amendments, discontinuation of hedge accounting remains necessary. In addition, the amendments clarify that if an entity designates cash flows based on an interest rate benchmark as the item covered in a cash flow hedge, the entity will not assume, in order to measure the ineffectiveness of the hedge, that the ex- pected replacement of the interest rate benchmark with an alternative reference rate will result in zero cash flow after replacement. Coverage gain or loss should be measured using cash flows based on an interest rate benchmark when applying a present value technique, discounted at a market discount rate that reflects the ex- pectations of market participants about the resulting uncertainty reform. Changes are mandatory for all hedging relationships to which exceptions apply. The changes have an effective date for the adoption of annual periods beginning on or after 1 January 2020. The changes are applied retrospectively to the hedging re- lationships existing at the beginning of the reporting period in which the entity first applies the changes and to the gain or loss recognized in comprehensive income at the beginning of the period in which the entity first applies the changes (that is, even if the reporting period is not an annual period). d) Definition of business (changes to IFRS 3 Business Concentration) On 22 October 2018, the IASB issued changes to its definition of business. The changes clarify that, to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that, 312

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