ANNUAL INTEGRATED REPORT 2021
ANNUAL INTEGRATED REPORT 2021 | AXTEL
tests annually and at any time that there is an indication that the
asset may be impaired.
To test for impairment, the Company uses projected cash flows,
which consider the estimates of future transactions, including
estimates of revenues, costs, operating expenses, capital
expenditures and debt service. In accordance with IFRS, discounted
future cash flows associated with an asset or CGU are compared
to the book value of the asset or CGU being tested to determine if
impairment exists whenever the aforementioned discounted future
cash flows are less than its book value. In such case, the carrying
amount of the asset or group of assets is reduced to its value in
use, unless its fair value is higher.
The Company estimates the useful lives of long-lived assets in
order to determine the depreciation and amortization expenses
to be recorded during the reporting period. The useful life of an
asset is calculated when the asset is acquired and is based on past
experience with similar assets, considering anticipated technological
changes or any other type of changes. Were technological changes
to occur faster than estimated, or differently than anticipated, the
useful lives assigned to these assets could have to be reduced.
This would lead to the recognition of a greater depreciation and
amortization expense in future periods. Alternatively, these types
of technological changes could result in the recognition of a charge
for impairment to reflect the reduction in the expected future
economic benefits associated with the assets.
b. Estimated impairment of goodwill and intangible assets with
indefinite useful lives
The Company conducts annual tests to determine whether goodwill
and intangibles assets with indefinite useful lives have suffered
any impairment (Note 12). For impairment testing, goodwill and
intangibles assets with indefinite lives is allocated with those cash
generating units (CGUS) of which the Company has considered that
economic and operational synergies of the business combinations
are generated. The recoverable amounts of the groups of CGUS
were determined based on the calculations of their value in use,
which require the use of estimates, within which the most significant
are the following:
•
•
Estimation of future gross and operating margins according to
the historical performance and expectations of the industry for
each CGU group.
Discount rate based on the weighted cost of capital (WACC) of
each CGU or CGU group.
Long-term growth rates.
c. Recoverability of deferred tax assets
The Company has applicable tax-loss carryforwards, which can be
used in the following years until maturity expires (See Note 20).
Based on the projections of income and taxable income that the
Company will generate in the following years through a structured
and robust business plan, management has considered that
current tax losses will be used before they expire and, therefore, it
was considered appropriate to recognize a deferred tax asset for
such losses.
d. Commitments and contingencies
The Company exercises its judgment in measuring and recognizing
provisions and the exposures to contingent liabilities related to
pending litigation or other pending claims subject to negotiation for
liquidation, mediation, arbitrage or government regulation, as well
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