Adoption of CPC 47 (IFRS 15)
In the accounting under IFRS up to the 3rd quarter of 2018, the investments were recognized as Financial Assets at amortized cost, pursuant to Resolution No. 1.261 of 12/10/2009 (Federal Accounting Council). Consequently, Revenues under IFRS reflected the movement of Financial Assets. As of January 1, 2018, the adoption of IFRS 9 (CPC 48) or IFRS 15 (CPC 47) became mandatory, in effect as of the disclosure of the Annual Financial Statements for 2018. The Company opted to adopt IFRS 15, whose principles are based on the business model that identifies the contract with the client (goods or services) and its respective contractual performance obligations, defining the price of the transaction and recognition of income as of the realization of these obligations (recognition of the Contractual Assets).
The rate considered in the calculation of Financial Asset was the Remuneration Rate of Financial Assets (TRAF) which matched the present value investment amount with the present value cash flow amount of receipts of the financial asset, that is, it was the flow internal rate of return. For calculation of the Contractual Assets, the rate adopted is the market rate at the time of the auction, fixed over the concession period (“Project Rate”). Taesa opted to adopt the actual auction WACC (ANEEL) as the Project Rate since it is a rate known and a reference to the market. It is important to mention that this change in the rate explained above applies only to companies that were built by the Company or are under construction. In the case of brownfield acquisitions, there was no change of rate.
Based on the foregoing, the recording of transmission assets became effective as Contractual Assets and no longer as Financial Assets. Therefore, the Contractual Assets are calculated on monthly basis as of the future flow of income brought to present value at the Project Rate.