1.2 — Use of judgment and estimates
The preparation of consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates due to the change in economic conditions, changes in laws and regulations, changes in strategy and the inherent imprecision associated with the use of estimates.
Key judgments and estimates used in the financial statements are summarized in the following table:
|
Note |
Judgments and estimates |
Key assumptions |
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|
Note 1.3 |
Going concern | Assessment of going concern considering financial restructuring progress | ||
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Note 2 |
Fair value of assets and liabilities acquired through purchase accounting | Pattern used to determine the fair value of assets and liabilities | ||
|
Note 3 |
Recoverability of client receivables | Assessment of clients’ credit default risk | ||
|
Notes 7 and 8 |
Valuation of investments |
Financial assets fair value Equity method companies fair value |
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|
Note 10 |
Amortization and impairment of multi-client surveys | Expected margin rate for each category of surveys | ||
|
Note 10 |
Depreciation and amortization of tangible and intangible assets | Assets useful lives | ||
|
Note 11 |
Recoverable value of goodwill and intangible assets |
Expected geophysical market trends and timing of recovery Discount rate (WACC) |
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|
Note 13 |
Classification of financial debt as current or non-current | Progress of the negotiations on Financial Restructuring | ||
|
Note 16 |
Post-employment benefits |
Discount rate Participation rate to post employment benefit plans Inflation rate |
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|
Note 16 |
Provisions for restructuring and onerous contracts | Assessment of future costs related to restructuring plans and onerous contracts | ||
|
Note 16 |
Provisions for risks, claims and litigations | Assessment of risks considering court rulings and attorney’s positions | ||
|
Note 19 |
Revenue recognition |
Contract completion rates Assessment of fair value of customer loyalty programs Assessment of fair value of contracts identifiable parts |
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|
Note 20 |
Development costs | Assessment of future benefits of each project | ||
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Note 24 |
Deferred tax assets | Hypothesis supporting the achievement of future taxable benefits | ||