Within the process of convergence of accounting practices adopted in Brazil with international standards (IFRS) 26 pronouncements, 12 interpretations and 1 orientation have been issued by the Accounting Pronouncements Committee (CPC) and approved by the Brazilian Securities Commission (CVM) during 2009 to be applied as from fiscal year 2010, among which the following are highlighted:
It establishes that the acquiring company should recognize the acquired assets and liabilities resulting from a business combination at their respective fair values, valued on the date of acquisition.
It specifies how the investments in affiliated companies should be recorded in the individual and consolidated financial statements of the investor and how investments in subsidiaries should be recorded in the financial statements of the parent company, where the innovation is the elimination on the part of the investor of profits and losses resulting from upstream and downstream transactions between the investor (including its consolidated subsidiaries) and the affiliated company or subsidiary.
It specifies how to record the interests in joint ventures and the disclosure of the assets, liabilities, revenues and expenses of these joint ventures in the financial statements of the investors, emphasizing that the investor only presents the gains and losses resulting from transactions with the joint venture that are attributable to the participation of the other entrepreneurs.
It defines which costs of loans are directly attributed to the acquisition, construction or production of qualifiable assets for their capitalization to form part of the cost of these assets. Additionally, it permits capitalization of costs of loans without a specific destination, through an average weighted rate of the costs of the loans that were in effect in the period.
It defines the basis for presentation of the financial statements in order to ensure comparison with prior periods of the same entity, as well as the financial statements of other entities, introducing the comprehensive income statement as the main innovation.
Among the various explanations, it stresses the process for initial and periodic review of the depreciation rates for property, plant and equipment and the necessary requisites for this review.
In light of the above, the Company is in the process of evaluating the potential effects with respect to these pronouncements and interpretation, as well and as the other pronouncements, interpretations and orientations issued during 2009 on the financial statements for the year ended December 31, 2009 to be presented for comparison purposes with the financial statements for the year ending December 31, 2010.