Management Report 2020
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SLC
Management Report 2020
d) Transactions eliminated on consolidation
Intragroup balances and transactions, and any unrealized revenues or ex-
penses derived from intragroup transactions, are eliminated in the preparation
of the consolidated financial statements. Unrealized gains arising from trans-
actions with investees recorded by equity method are eliminated against the
Group's investment in the investee.
Unrealized losses are eliminated in the same way as unrealized gains are elim-
inated, but only to the extent that there is no evidence of impairment loss.
e) Significant accounting judgments, estimates and assumptions
The preparation of the individual and consolidated financial statements re-
quires the use certain critical accounting estimates and also the exercise of
judgment by the Management in the process of applying accounting policies,
for the accounting for certain assets, liabilities, income and expenses.
Estimates and exercise of judgment are continually revisited and the results of
this process are recognized on a timely basis and in any affected future peri-
ods. Actual results may differ from these estimates when it is actually carried
out.
Information on judgments, estimates and accounting assumptions that may
result in significant effects on the amounts recognized in the financial state-
ments financial statements are presented below:
Grades
3.c and 8
3.e, 14 and
15
3.q and 13
3.j and 19
3.h and 10
3.i and 25
3.k and 28
12
Measurement of the fair value of biological assets
Nature
Selection of useful lives of property, plant and equipment and intangible
assets
Discount rate applied in measuring lease liabilities
Provision for tax, environmental, labor and civil risks and contingent as-
sets
Deferred income and social contribution taxes
Measurement of the fair value of financial instruments
Measurement of the fair value of share-based payment transactions on
the grant date
Measurement of the fair value of investment properties
3. Accounting policies
Agrícola
The accounting policies described in detail below have been applied consist-
ently for all years presented in these individual and consolidated financial
statements.
a) Revenue recognition
Revenue is recognized when control of the product or service is transferred to
the customer for an amount that reflects the consideration that the Company
expects to be entitled to. Revenue is measured at the fair value of the consid-
eration received, excluding discounts, rebates and taxes or sales charges. The
following specific criteria must also be met before revenue recognition:
Sale of goods | Operating revenue from the Sale of goods in the normal course
of business is recognized in income, when control of the products is transferred
to the customer and the Company and its subsidiary no longer have control or
responsibility over the products sold.
Land sales | Some subsidiaries are engaged in land sales. Sales take place in
line with the current real estate gains realization strategy, being recognized
as provided for in the Revenue recognition section above.
In the consolidated financial statements, these revenues are classified in the
group "other operating income", as they do not represent the main object of
the Group's business.
b) Inventories
Agricultural produce from biological assets is measured at fair value less sell-
ing expenses at the point of harvest when it is transferred from the biological
asset group to the inventory group and measured at the weighted average of
fair harvest values.
Inventories of seeds, fertilizers, pesticides, fuels, lubricants, packaging and
wrapping material, spare parts and other Inventories were valued at average
purchase cost.
Provisions for slow-moving or obsolete Inventories are set up when deemed nec-
essary by management.
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