AMPER, SA and Subsidiaries Consolidated Financial Statements for ...

Impairment losses, defaults on loans and other receivables and debt instruments are recognized
by means of an entry in the allowance account of financial assets. As soon as it is considered that
the impairment or default are irreversible, the book value is eliminated and the amount is charged
to the allowance account.
g) Inventory
Inventory is valued at the lower of cost and net realisable value. The cost includes direct
materials and, as the case may be, direct labour costs and the overheads incurred when
transferring inventory to its current location and condition.
The cost price is calculated using the weighted average method. Net realisable value is the
estimate of the selling price minus all estimated costs of completion and costs incurred in
marketing, selling and distribution.
Trade discounts, rebates and other similar items are deducted in the determination of the
purchase price.
The Company makes an assessment of the realisable net value of the inventory at the end of the
financial year, based on the ageing and turnover of the materials, recognising a loss when these
are seen to be overstated. When the circumstances that previously caused inventory to be written
down, or when there is clear evidence of an increase in the realisable net value due to a change
in economic circumstances, the write-down is reversed.
h) Government grants (Deferred revenues)
Grants related to assets are received for investments in tangible and intangible fixed assets and
are taken to income in proportion to the depreciation/amortisation of the subsidised assets.
Operating grants are taken to income in the year in which they are granted.
i) Provisions
At the time of formulating the financial statements of the consolidated companies, their respective
Administrators differentiate between:
• Provisions: credit balances that cover obligations present at the balance sheet date arising from
past events that could cause a loss for the companies. They are specific in nature but
indeterminate in terms of their sum and/or time of cancellation, and
• Contingent liabilities: possible obligations arising from past events, whose materialisation
depends on whether (or not) one or more future events occur that are outside the control of the
consolidated companies.
The Group's consolidated financial statements include all major provisions, so it is estimated that
the probability of having to cover the debt is greater than the opposite case (Note 12). Contingent
liabilities are not recognised in the annual consolidated financial statements, but rather are
disclosed (Note 24).
Provisions - which are quantified based on the best available information on the consequences of
the event giving rise to them and are reviewed and adjusted at the end of each year - are used to
take on the specific obligations for which they were originally recognised. They are then reversed
(totally or partially) when these obligations no longer exist or are reduced.
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