2020 Annual Report
2020 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
MEGACABLE.
a tax audit process is initiated, the Group would recognize a liability for those matters observed in the tax audits if it
considers that it is probable that an additional tax to the original current tax will be determined. Should the final result of
these processes produce a result other than the estimated liability, the differences would be recognized in the current and/
or deferred income tax for the year.
Based on the simulations performed, the impact on the pretax income due to a 5% movement would give rise to a
maximum increase or decrease of $66,775 in 2020 with $66,031 in 2019. Simulations are periodically prepared to verify
that the maximum potential loss is within the limit established by Management.
The determination of the final tax calculation may be uncertain due to the complexity and judgments required to handle
certain transactions. When the final result of this situation is different from the amounts that were initially recorded, the
differences will impact the current and deferred income tax on assets and liabilities in the period in which it is determined.
At the 2020 and 2019 year-end closing, the Group does not have uncertain tax positions.
f) Allowance for impairment of accounts receivable
The methodology the Group applied to determine the balance of this estimate is described in Note 2k).
If the allowance for bad debts as at December 31, 2020 and 2019 is modified by 10% above and/or below the estimates
made by Management, the Group would have increased and/or decreased said estimate at December 31, 2020 and
2019 by $26,511 and $23,740, respectively, and the operating results would have been affected and/or benefited by the
same amount.
g) Allowance for obsolete inventories
The Group's Management has an allowance for inventories with different kinds of defects and for slow-moving inventories.
The goods that cannot be used for its own operation include products that will expire in the next few months, that have a
broken label or a label in bad condition, or products in poor conditions. This allowance is determined based on the age and
monitoring reports prepared by Management regarding said products.
h) Estimated useful lives and residual values of property, networks and equipment
The Group prepares the estimated useful lives of its property, networks and equipment to determine the depreciation
expense to be recognized in a reporting period. The useful life of these assets is calculated at the time the asset is
acquired, based on past experience with similar assets and taking into account anticipated technological changes or
changes of any other nature. If technological changes occur faster than foreseen or in a different way than anticipated,
the useful lives assigned to these assets may need to be shortened. This would result in the recognition of a higher
depreciation and amortization expense in future periods. Alternatively, these types of technological changes could result
in the recognition of an impairment charge to reflect the reduction in the value of assets. The Group reviews the assets
annually to see if they show signs of impairment, or when certain events or circumstances indicate that the book value
may not be recovered throughout the remaining life of the assets. Should there be indicators of impairment, the Company
conducts a study to determine the value in use of the assets. As at December 31, 2020 and 2019, there were no indicators
of impairment.
i) Pension plan benefits
The present value of pension plan obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used to determine the net cost (income) for pensions include the
discount rate. Any change in these assumptions will have an impact on the book value of the pension plan obligations.
As at December 31, 2020 and 2019, the Group used the zero coupon government bond curve of 6.50% and 7.50%,
respectively, for the discount rate.
If the discount rate used as at December 31, 2020 and 2019 had been different by 1%, from the estimates made by
Management, the book value of the obligations for pension plans would have been lower by approximately $15,926 and
$21,756, respectively.
Other premises used to estimate pension obligations are based on current market conditions. Additional information is
disclosed in Note 16.
j) Fair value measurement
The Group applies the guidelines in IFRS 13, Fair value measurements ("IFRS 13") to measure the fair value of financial
assets and liabilities recognized or disclosed at fair value. IFRS 13 does not require additional fair values other than those
already required or permitted by other IFRS, and it does not intend to establish valuation standards or affect valuation
practices outside of the financial report. Under IFRS, the fair value represents the "Sale Price" that would be received to sell
an asset or pay to transfer a liability in an orderly transaction between market participants at the valuation date, considering
the credit risk of the counterparty in the valuation.
The selling price concept is based on the assumption that there is a market and market participants for the specific asset or
liability. When there is no market and/or participants to form the market, IFRS 13 establishes a hierarchy of fair value for the
input data of the valuation techniques used to determine the fair value. The highest priority hierarchy is that of unadjusted
quoted prices in an active market for identical assets or liabilities (measurement level 1) and the lowest priority is that of
calculations dealing with significant but unobservable input data (measurement level 3).
The three hierarchy levels are as follows:
(1) Level 1 data are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group has the
ability to trade at the measurement date.
(2) Level 2 are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly or indirectly.
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