IBERSOL | Annual Report 2020

Consolidated Financial Statements In these contracts it is normal to contract the payment of an “Initial Fee” at the beginning of each contract and a “Renewall Fee” at the end of the initial period, in addition to a royalty of marketing operations on the sales made. Periodically, development contracts are negotiated which guarantee the right to open new restaurants. 3.3 ESTIMATED FAIR VALUE The fair value of financial instruments commercialised in active markets (such as publicly negotiated derivatives, securities for negotiation and available for sale) is determined based on the listed market prices on the consolidated statement of fi- nancial position date. The market price used for the group’s financial assets is the price received by the shareholders in the current market. The market price for finan- cial liabilities is the price to be paid in the current market. The nominal value of accounts receivable (minus impairment adjustments) and ac- counts payable is assumed to be as approximate to its fair value. The fair value of financial liabilities is estimated by updating future cash flows contracted at the cur- rent market interest rate that is available for similar financial instruments. 4. MAIN ACCOUNTING ESTIMATES AND JUDGMENTS Estimates and judgements are continuously evaluated and are based on past experi- ence 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. Esti- mates and premises that present a significant risk of leading to a material adjust- ment in the accounting value of the assets and liabilities in the following year are described below: 340