ANNUAL INTEGRATED REPORT 2021

1331 ANNUAL INTEGRATED REPORT 2021 | AXTEL Trademarks are amortized according to their useful life based on the Company's evaluation; if in this evaluation the useful life proves to be indefinite, then trademarks are not amortized but subject to annual impairment tests. b. Licenses Licenses acquired in a separate transaction are recorded at acquisition cost. Licenses acquired in a business combination are recognized at fair value at acquisition date. Licenses that have a definite useful life are presented at cost less accumulated amortization. Amortization is recorded on a straight- line basis over its estimated useful life. The acquisition of software licenses is capitalized based on the costs incurred to acquire and use the specific software. ii. Indefinite useful life These intangible assets are not amortized and are subject to annual impairment assessment. As of December 31, 2021, 2020 and 2019, intangible assets with an indefinite life corresponds to goodwill. n. Goodwill Goodwill represents the excess of the acquisition cost of a subsidiary over the Company's interest in the fair value of the identifiable net assets acquired, determined at the date of acquisition, and is not subject to amortization. Goodwill is shown under goodwill and intangible assets and is recognized at cost less accumulated impairment losses, which are not reversed. Gains or losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold. o. Impairment of non-financial assets Assets that have an indefinite useful life, for example goodwill, are not depreciable or amortizable and are subject to annual impairment tests. Assets that are subject to amortization are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels at which separately identifiable cash flows exist (cash generating units). Non-financial long-term assets other than goodwill that have suffered impairment are reviewed for a possible reversal of the impairment at each reporting date. p. Income tax The amount of income taxes in the consolidated statement of income represents the sum of current and deferred income taxes. The amount of income taxes included in the consolidated statement of income represents the current tax of the year and the effects of deferred income tax determined in each subsidiary by the assets and liabilities method, applying the rate established by the legislation

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