IBERSOL | Annual Report 2021

CONSOLIDATED FINANCIAL STATEMENTS Restaurants with signs of impairment are tested, considering operating results less amortization, depreciation and impairment losses on property, plant and equipment, intangible assets and goodwill, as well as other cash-generating units whenever cir- cumstances dictate or unusual facts occur. Goodwill is distributed among the units (or group of units) generating the flows (CGU) of the Group, identified in each business segment. The recognized amount of Goodwill is compared with the recoverable amount, which is the higher of the value in use and the fair value less costs to sell. The value in use of a CGU is determined based on cash flow projections based on financial budgets approved by managers, covering at least a period of 5 years. The Board of Directors determines the budgeted gross margin based on past per- formance and on its market growth expectations. The average weighted growth rate used is consistent with provisions included in the sector’s reports. The discount rates used after taxes and reflect specific risks related with the assets from a CGU. 2.10 FINANCIAL ASSETS 2.10.1 Classification The Group classifies its other financial assets at the time of initial recognition in accordance with the requirements introduced by IFRS 9, in the following asset cat- egories. a) Assets measured at amortized cost A financial asset is measured at amortized cost if the objective inherent to the busi- ness model is achieved by collecting the respective contractual cash flows and if the underlying contractual cash flows represent only the payment of principal and interest. Assets classified in this category are initially recognized at fair value and subsequently measured at amortized cost. Loans and accounts receivable from customers are generally held for the purpose of collecting contractual cash flows and it is expected that the underlying contractual cash flows represent only the payment of principal and interest and therefore com- ply with the requirements for measurement at amortized cost provided for in IFRS 9. b) Assets measured at fair value through other comprehensive income A financial asset is measured at fair value through other comprehensive income if the objective inherent to the business model used is achieved either by collecting contractual cash flows or by selling financial assets and if the he underlying contrac- tual cash flows represent only payment of principal and interest. The assets classi- fied in this category are initially and subsequently measured at their fair value, and the changes in their accounting value are recorded against other comprehensive income, except for the recognition of impairment losses, interest and when the fi- nancial asset is derecognized, the gain or loss accumulated in other comprehensive income is reclassified to the income statement. 348