I - Other operating Gains & Losses: General principles 

7. Financial items related to operational (R381)

Content

• R53620 - Other financial expenses related to operational
• R53720 - Other financial income related to operational
• R53900 - Financial risks provision and loans written off related to operational
• R53910 - Write-down of financial assets on non-consolidated companies

Other financial expenses (R53620) and income (R53720) related to operational

• Miscellaneous financial gains and losses relating to the usual business of an entity but resulting from events unconnected to its activities
  • Are taken into account:
    • Relating to miscellaneous receivables, time deposits and cash assets:
      • Gains and losses on realizations.
        Note: Realization is used here in the meaning not only of sale and resale, but also of contribution and compensation.
      • Write-downs and reversals of write-downs.
      • Results from reinsurance activities.
      • Other financial charges and income:
        • Positive or negative variation between the provision for discount (net sales) and the discount really granted.
        • Expenses related to trade and miscellaneous liabilities, such as interests paid to suppliers, social security institutions, ....
        • Financial expenses related to research costs.
        • Other financial expenses:
          • Customer discount when it has not been considered in the payment terms
          • Penalities due to arrears
          • Charges on discounted bills for the Mercosur only (non-Mercosur: "R54620 - Other financial charges related to non-operational items")
          • Interest paid on sureties, backing
          • Bank charges
          • Costs of buying and selling financial instruments, taxes on financial instruments listed on the stock exchange
          • Company organization costs
          • Equity issuance costs incurred by subsidiaries and joint operations (e.g. expenses and taxes related to capital increases)
          • Exchange commissions
          • Miscellaneous financial charges
        • Other financial income:
          • Discount obtained from suppliers, linked to payment terms
          • Income on discounted bills for the Mercosur only (non-Mercosur: "R54720 - Other financial income related to non-operational items")
          • Commissions received on credit lines
          • Interest received on sureties, backing
          • Income from trade receivables
          • Service fees received from customers
          •  Miscellaneous financial income
        • Interests on loans to personnel.
    • Are not taken into account
      • Gains and losses on exchange rate and currency conversion ("R53800 - Foreign operational exchange gains and losses - realized and unrealized").
• Interests received by the entity on its external financial receivables

Financial risks provision and loans written off related to operational (R53900)

• Write-down and reversal on external financial receivables
• Gains and losses on sale of external financial receivables
• Loans written off related to operational

Write-down of financial assets on non-consolidated companies (R53910)

= Write-down and reversal recorded by the entity on its long-term investments to bring their value more closely into line with market realities.

Include equity earnings related to non-consolidated companies (for consolidated companies, the equity earnings are declared in R53920 - Write-down on consolidated companies.

Comments:

• This heading is used when an economic revaluation of investments is decided upon.
• Write-downs are charged in the event of a long-lasting decline in the value of investments, so as to adjust their book value to their market value.
• Write-downs should be reversed if they become wholly or partly inapplicable.