| 2.2.4 | Financial Instruments |
| a) | Financial assets |
The Company classifies its financial assets in the following categories: (i) measured at fair value through profit or loss, including assets held for trading (ii) available for sale, (iii) held to maturity, and (iv) loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management decides on the classification of its financial assets at initial recognition.
Financial assets are initially recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and the respective transaction costs are expensed in the statement of income.
Financial assets are derecognized when the rights to receive cash flows have expired or have been transferred. Derecognition occurs if the Company has transferred substantially all risks and rewards of the asset ownership.
| b) | Classification and measurement |
| b.1) | Financial assets measured at fair value through profit or loss |
Financial assets measured at fair value through profit or loss are those held for active and frequent trading. Gains and losses resulting from differences in the fair value are presented in the statement of income in financial income in the period in which they occur.
The fair values of publicly quoted investments are based on the current purchase and sale prices. In the case of financial assets without an active market or not publicly quoted, the Company uses valuation techniques to calculate the fair value. These methods include comparison with recent transactions with third parties, reference to other substantially similar instruments, analysis of discounted cash flows and options pricing models that prioritize market information and minimize information generated by Management.
| b.2) | Financial assets available for sale |
Financial assets available for sale are non-derivative instruments measured at fair value that the Company intends to sell. They are included in non-current assets, unless Management intends to dispose of the investment within 12 months after the statement of financial position date.
| b.3) | Investments held to maturity |
Investments in non-derivative instruments that the Company has the ability and intention to hold until maturity are classified as investments held to maturity and are measured initially at fair value, including the transaction cost, and subsequently at amortized cost, using the effective interest method.
| b.4) | Loans and receivables |
This category includes loans granted and receivables that are non derivative financial assets with determined or fixed payments, not traded in an active market.
The Company’s loans and receivables include trade accounts receivable, financing of customers and other receivables and are not subject to the use of fair value. Interest on loans and receivables is calculated by the effective interest rate method and recognized in the income statement as financial income (expense), net.
| c) | Adjustment to fair market value |
The Company evaluates if there is objective evidence at the balance sheet date that a financial asset or financial group is recognized at an amount higher than its recoverable amount. If applicable, a provision is recognized for impairment of the asset.