COSTS AND REVENUES

To take the time factor into account, the interest rate inferable from the contractual terms and conditions must be compared with market interest rates, the rate that would have been applied if two independent parties had negotiated a similar financing transaction with comparable terms and conditions to the one in question.

Trade payables with maturities beyond 12 months from initial recognition, without interest payments, or with interest significantly different from market interest rates, and related costs, are initially recognised at the value determined by discounting future cash flows at the market interest rate. The difference between the initial recognition value of the debt thus established and the forward value must be recorded in the profit and loss account as a financial liability over the life of the debt using the effective interest rate method.

The company removes all or part of a debt from the financial statements when the contractual and/or legal obligation is settled by fulfilment or other reason, or transferred. The settlement of a debt and the issuance of a new debt to the same counterparty results in the elimination from the accounts if the contractual terms of the original debt differ materially from those of the debt issued.

COSTS AND REVENUES

Revenues from the sale of products and goods or the provision of services related to normal operations are recorded net of returns, trade discounts, rebates and premiums, as well as taxes directly related to the sale of products and the provision of services, in accordance with the accrual and prudence principles.

Revenue from the sale of goods or the provision of services is recognised when the production process of the goods or services has been completed and the exchange has taken place, i.e. the substantive and non-formal transfer of ownership has occurred, taking the transfer of risks and benefits as the benchmark.

Production costs are recorded net of returns, trade discounts, rebates and premiums. Costs originated by the purchase of goods are recorded when the manufacturing of the goods is completed and the substantial transfer of ownership has occurred, with the transfer of risks and benefits as the benchmark. Costs arising from the purchase of services are recorded when the services are received, i.e. when the service has been rendered.

Revenues and income, costs and expenses related to foreign currency transactions are calculated at the spot exchange rate on the date the relevant transaction is executed.