18.10) Intangible assets
18.10.1) Concessions
The airports that are part of the Company performed the analysis of the criteria that must be taken into account to know if they are within the scope of IFRIC 12:
| a. | The grantor controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them at what price, |
| · | The grantor does not need to have full price control; it is sufficient that the price is regulated by the grantor, the contract or the regulator; |
| · | The grantor can control the price through a limit mechanism; |
| · | The price can vary from fixed price arrangements to those based on a formula up to a maximum price. |
| b. | The grantor controls, through ownership, the right of benefits or otherwise, any significant residual interest in the infrastructure at the end of the term of the agreement. |
Taking into consideration the foregoing, these criteria are applicable to each of the concessions that the Company has, which is why their measurement and determination will be considered within the scope of IFRIC 12. In addition, at the end of all the concessions all assets become the property of the nation in which the concession is located.
Within the scope of IFRIC 12, the respective assets can be classified as:
| · | Financial assets: When the licensor establishes an unconditional right to receive cash flows and other financial assets independently of the use of the public service by the users. |
| · | Intangible assets: Only when the licensor agreements do not establish a contractual right to receive cash flows and other financial assets from the licensor, independently of the use of the public service by the users. Airport concessions have been considered within the scope of IFRIC 12 as an intangible asset because they comply with the above provisions and no financial assets have been recognized in that regard. |
Mexico:
Rights to use airport facilities and airport concessions include the acquisition of the nine airport concessions and the rights acquired from Cancún Air, Dicas and Aeropremier.
Amortization is computed using the straight-line method over the estimated useful life of the concessions, which is 31 years as of December 31, 2017.
Aerostar:
The airport concession right, which includes certain capital expenditures in improvement projects, is recognized as an intangible asset at its cost less accumulated amortization and impairment losses.
Amortization is calculated using the straight-line method during the term of the Agreement (40 years); 36 years as of December 31, 2017.
Airplan:
In the case of Airplan, the right granted by the Concession Contract No.8000011-OK and Public Tender No.10000001OL2010, respectively, is recorded as intangible, through which the grantors assign to the Company the regulated and unregulated income corresponding to each of the airports subject to the concession.
In turn, the costs per loan that are related to the works in execution are part of the intangible.
The intangible asset resulting from the recognition and updating of the estimated income of the contract is amortized based on the proportion of the accumulated income of the contract and the total income. Amortization is recognized in the results of the period.
The useful life for the amortization was determined as the duration of the concession and the amortization rate is calculated based on the percentage of execution of the revenues with respect to the total expected income of the financial model that the Company has. The minimum term of the concession is the year 2015; however, in accordance with the complementary works carried out and the measurement of the expected income against the income generated, the concession will have a useful life until the year 2032.
18.10.2) Licenses and direct commercial operations (ODC, by its initials in Spanish)
These items are recognized at their cost less the accrued amortization and any recognized impairment losses. They are amortized on a straight line basis using their estimated useful life, determined based on the expected future economic benefits, and are subject to testing when indication of impairment is identified.
The estimated useful lives at December 31, 2017 are as follows:
| Licenses | 31 years |
| ODC | 31 years |
| Commercial Rights of Aerostar | 36 years |
| | |
| Commercial Rights of Airplan | 15 years |
18.10.3) Goodwill
Goodwill represents the acquisition cost of a subsidiary in excess of the Company's interest in the fair value of the identifiable net assets acquired, determined at the acquisition date, and it is not subject to amortization. Goodwill is shown separately in the consolidated statement of financial position and is recorded at cost less accumulated impairment losses, which are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
18.10.4) Intangible assets acquired as part of a business combination
When an intangible asset is acquired as part of a business combination, it is recognized at fair value at acquisition date. Subsequently,. intangible assets acquired in a business combination, such as commercial rights, are recognized at cost less the accumulated amortization and the accrued amount of impairment losses. Adjustments related to remeasurement, gain or loss related to an equity accounted investment are presented in non-operating income (loss).
