| 2.2.24 | Provisions, contingent assets and liabilities, legal obligations and judicial deposits |
Provisions – provisions are recognized based on the judgment of the Company’s Management and its legal counsel, the nature of the lawsuits, legal precedent, complexity and court interpretations, whenever the loss is considered probable, when such loss would result in a probable outflow of resources to settle the obligations and when the amounts involved can be measured with a reasonable degree of certainty. The amounts provided represent the Company’s best estimate of the anticipated outflow of resources.
Contingent assets – are not recognized except when the Company concludes that the gain is virtually certain, has the right to real guarantees or has received a favorable and unappealable legal decision.
Contingent liabilities – amounts for which disbursement is classified as possible are disclosed but not recorded in the financial statements. Where the probability of loss is classified as remote, neither provision nor disclosure are required.
Legal obligations - arise from tax liabilities, the legality or constitutionality of which is under appeal. The related amounts are fully provided for.
Court-mandated escrow deposits are recorded as other assets.