ANNUAL INTEGRATED REPORT 2021
ANNUAL INTEGRATED REPORT 2021 | AXTEL
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for as if the Company had directly disposed of the related assets
and liabilities. This results in the amounts previously recognized in
comprehensive (loss) income being reclassified to income for the
year.
vi. Associates
Associates are all entities over which the Company has significant
influence but not control. Generally, an investor must hold between
20% and 50% of the voting rights in an investee for it to be an
associate. Investments in associates are accounted for using the
equity method and are initially recognized at cost. The Company's
investment in associates includes goodwill identified at acquisition,
net of any accumulated impairment loss.
If the equity in an associate is reduced but significant influence is
maintained, only a portion of the amounts previously recognized
in comprehensive (loss) income are reclassified to income for the
year, where appropriate.
The Company's share of profits or losses of associates, post-
acquisition, is recognized in the consolidated statement of income
and its share in other comprehensive (loss) income of associates
is recognized as other comprehensive (loss) income. When the
Company's share of losses in an associate equals or exceeds its
interest in the associate, including unsecured receivables, the
Company does not recognize further losses unless it has incurred
obligations or made payments on behalf of the associate.
The Company assesses at each reporting date whether there is
objective evidence that the investment in the associate is impaired.
If so, the Company calculates the amount of impairment as the
difference between the recoverable amount of the associate and its
carrying value and recognizes it in "Equity in income of associates
recognized using the equity method" in the consolidated statement
of income.
Unrealized gains on transactions between the Company and
its associates are eliminated to the extent of the Company's
interest in such gains. Unrealized losses are also eliminated unless
the transaction provides evidence that the transferred asset is
impaired. In order to ensure consistency with the policies adopted
by the Company, the accounting policies of associates have been
amended. When the Company ceases to have significant influence
over an associate, any difference between the fair value of the
remaining investment, including any consideration received from
the partial disposal of the investment, and the book value of the
investment is recognized in the consolidated statement of income.
As of December 31, 2021, 2020 and 2019, the Company has no
investments in associates.
d. Foreign currency translation
i. Functional and presentation currency
The amounts included in the financial statements of each of the
Company's subsidiaries should be measured using the currency of
the primary economic environment in which the entity operates (the
"functional currency"). The consolidated financial statements are
presented in Mexican pesos, which is the Company's presentation
currency. Note 3c describes the functional currency of the Company
and its subsidiaries.
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