IBERSOL | Integrated Management Report 2022

INTEGRATED MANAGEMENT REPORT 2022 6. Investments 6.1.Goodwill Accounting policies Recognition Goodwill represents the excess of acquisition cost over the fair value of identifiable assets and liabilities attributable to the Group at the date of acquisition or first con- solidation. If the acquisition cost is lower than the fair value of the acquired subsidi- ary’s net assets, the difference is recognized directly in profit or loss for the year. Goodwill is allocated to the Group’s cash generating units (or group of units), identi- fied in each business segment. Impairment The Group performs impairment tests on Goodwill on an annual basis or more fre- quently if events or changes in circumstances indicate a potential impairment. The recognized amount of Goodwill is compared with the recoverable amount, which is the higher of value in use and fair value less costs to sell. The value in use 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 perfor- mance and its expectations for market development. The weighted average growth rate used is consistent with forecasts included in sector reports. Discount rates are applied after tax and reflect specific risks related to the assets. Whenever the book value of Goodwill exceeds its recoverable amount, the impair- ment is immediately recognized as an expense and is not subsequently reversed. Goodwill is allocated to each of the reportable segments as follows: Dec/2022 Dec/2021 Restaurants 7 147 721 7 147 721 Counters 12 558 945 37 199 991 Concessions and Catering 34 505 388 34 505 388 Others 179 721 179 721 Total 54 391 775 79 032 821 419