IBERSOL | Integrated Management Report 2022

INTEGRATED MANAGEMENT REPORT 2022 year, unless they arise on monetary items that form part of the net investment in a foreign operation. In this case, exchange differences are initially recognized in other comprehensive income and are reclassified from equity to consolidated net income for the year on the disposal of all or part of that operation.. Exchange differences related to financing (financial) transactions are recorded as fi- nance costs or income. Exchange differences related to operating activities are re- corded under “Other operating income / (expenses)”. Assets and liabilities in the financial statements of foreign entities are translated into euros using the exchange rates at the balance sheet date and costs and income as well as cash flows are translated into euros using the average exchange rate for the period. The resulting exchange difference is recorded in the equity caption “Transla- tion reserve”. Goodwill and fair value adjustments arising from the acquisition of foreign entities are treated as assets and liabilities of that entity and translated to Euro at the balance sheet date exchange rate. Whenever a foreign entity is sold, the accumulated exchange rate difference is recog- nized in the income statement as a gain or loss on the disposal. 2.2. New standards, amendment and interpretation Standards Change Date of application Standards and amendments endorsed by the European Union and mandatory for financial years beginning on or after 1 January 2022 Reference to the Conceptual Framework (Amendments to IFRS 3) In May 2020 the IASB issued Reference to the Conceptual Framework, which made amendments to IFRS 3 Business Combinations. The amendments updated IFRS 3 by replacing a reference to an old version of the Board’s Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The Amendments shall be applied to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2022. Earlier application is permitted if at the same time or earlier an entity also applies all the amendments made by Amendments to References to the Conceptual Framework in IFRS Standards, issued in March 2018. 1 January 2022 391