IBERSOL | Annual Report 2021

CONSOLIDATED FINANCIAL STATEMENTS losses over a period that, by business or type of customer, were considered statisti- cally significant and representative of the specific characteristics of the underlying credit risk. b) Other amounts receivable and financial assets For other receivables and financial assets valued at amortized cost, the Group pre- pares its analyzes based on the general model, assessing at each date whether a significant increase in credit risk has occurred since the date of initial recognition of such asset. If there has been no increase in credit risk, an impairment corresponding to the amount equivalent to expected losses within a 12-month period is calculated. If there has been an increase in credit risk, the impairment calculation considers the expected losses for all contractual cash flows until the asset’s maturity. It is assumed that there is a significant increase in credit risk (and the determination of impairment for all contractual flows of the asset up to its maturity date) if the debtor’s external rating undergoes a material reduction or if a debtor is more than 90 days from the contractual payment date. The Group makes estimates based on the risk of default and loss rates, which require judgment. The inputs used to assess the risk of losses on these financial assets in- clude: • credit ratings (to the extent available) obtained through information provided by rating agencies such as Standard and Poor’s and Moody’s; • significant changes in expected performance and debtor behavior; and • data extracted from the market, in particular on probabilities of non-compliance. 2.11 INVENTORIES Inventories are presented at the lowest value between their cost and the net realisa- tion value. The cost is calculated using the weighted mean cost, and it is equivalent to the acquisition cost deducted from quantity discounts. Personal alimentation costs are reflected in personnel expenses, against stocks in- ventory. The net realisation value corresponds to the estimated sale price during normal busi- ness operations, minus variable sale costs. 2.12 ACCOUNTS RECEIVABLE AND OTHER DEBTORS AND ACCOUNTS PAYABLE TO SUPPLIERS AND OTHER CREDITORS Accounts receivable and other debtors are initially recognised at the fair value. Me- dium- and long-term debts are subsequently measured at the amortised cost, using the effective rate method minus the impairment adjustment. Debts to suppliers and non-interest bearing third parties are measured at amortized 350