IBERSOL | Annual Report 2021

ANNUAL REPORT 2021 In identifying onerous contracts, the Group considers whether the unavoidable costs of fulfilling the contract exceed the economic benefits expected under such a con- tract. In the event that an onerous contract is identified, a provision is recognized for the difference between the unavoidable costs and the expected benefits of the contract. 2.18 RECOGNISING REVENUE Revenue is measured at the amount that the entity expects to be entitled to receive under the contract entered into with the customer. The revenue recognition model is based on five steps of analysis, in order to deter- mine when the revenue should be recognized and the amount to be recognized: 1) Identify the contract with the customer; 2) Identification of performance obligations; 3) Determine the transaction price; 4) Allocate the transaction price; and 5) Recognition of revenue. Revenue is recognized only when the performance obligation is satisfied, which de- pends on whether the performance obligations are met over time or whether, on the contrary, control over the good or service is transferred to the customer in a given time. Revenue is recognized as follows: Sale of goods - retail In most of the Group’s sales of goods, there is only one performance obligation, so revenue is recognized immediately, with the delivery of the goods to the customer. A performance obligation corresponds to a commitment to deliver goods or services to customers that are different between. When evaluating contracts with customers in which a third party is involved, namely at the level of deliverers (home delivery), the Group assesses its relationship be- tween agent and principal, having concluded that with regard to the obligation of performance of delivery of the goods, it acts as an agent, since this performance obligation belongs to the respective aggregators, and in relation to the performance obligation for the sale of goods, Ibersol acts as the principal and the aggregators with an agent, since Ibersol is responsible for its production, manufacture packaging and shipping. 2.19 RIGHT OF USE AND LEASES LIABILITIES A lease is defined as a contract or part of a contract that conveys the right to use an asset for a certain period, in exchange for a fee. The Group’s leases essentially respect the lease contracts for stores and commercial spaces and for equipment used in these spaces. The Group is also a lessee in vehicle and other equipment leasing contracts. More than 90% of leasing contracts refer to the leasing of spaces whose characteristics differ according to the space in which 353