CVM Resolution No. 106 of May 20, 2022

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM makes public that the Board, in a meeting held on April 14, 2022, based on §§ 3 and 5 of art. 177 of Law No. 6,404, of December 15, 1976, combined with items II and IV of § 1 of art. 22 of Law No. 6,385, of December 7, 1976, as well as arts. 5 and 14 of Decree No. 10,139, of November 28, 2019,

APPROVED the following Resolution:

Art. 1. It is made mandatory for publicly-held companies to apply Technical Pronouncement CPC 26(R1), which deals with the Presentation of Financial Statements, issued by the Accounting Pronouncements Committee - CPC, as consolidated in Annex “A” to this Resolution.

Art. 2. Deliberação 676, of December 13, 2011, is revoked, from the effective date of this Resolution.

Art. 3. This Resolution enters into force on July 1, 2022.

Signed electronically by
Marcelo Barbosa
President

Summary Item
OBJECTIVE 1
SCOPE 2 – 6
DEFINITIONS 7 – 8A
FINANCIAL STATEMENTS 9 – 46
Purpose of financial statements 9
Complete set of financial statements 10 – 14
General considerations 15 – 46
Fair presentation and compliance with Brazilian accounting practices 15 – 24 Going concern 25 – 26 Accrual basis 27 – 28 Materiality and aggregation 29 – 31 Offsetting 32 – 35 Frequency of reporting 36 – 37 Comparative information 38 – 44 Consistency of presentation 45 – 46 STRUCTURE AND CONTENT 47 – 138 Introduction 47 – 48 Identification of financial statements 49 – 53 Statement of financial position 54 – 80A Information to be presented in the statement of financial position 54 – 59 Distinction between current and non-current 60 – 65 Current assets 66 – 68 Current liabilities 69 – 76 Information to be presented in the statement of financial position or in the notes 77 – 80A

COMISSÃO DE VALORES MOBILIÁRIOS
Rua Sete de Setembro, 111/2-5º e 23-34º Andares, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brasil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2º, 3º e 4º Andares, Bela Vista, São Paulo/ SP – CEP: 01333-010 – Brasil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4º Andar, Brasília/DF – CEP: 70712-900 – Brasil -Tel.: (61) 3327-2030/2031 www.gov.br/cvm RESOLUÇÃO CVM Nº 106, DE 20 DE MAIO DE 2022 Statement of profit or loss and statement of comprehensive income 81 – 105 Information to be presented in the statement of profit or loss and the statement of comprehensive income 82 – 87 Profit or loss for the period 88 – 89 Other comprehensive income for the period 90 – 96 Information to be presented in the statement of profit or loss for the period or in the notes 97 – 105 Statement of changes in equity 106 – 110 Information to be presented in the statement of changes in equity 106 Information to be presented in the statement of changes in equity or in the notes 106A – 110 Statement of cash flows 111 Notes 112 – 138 Structure 112 – 116 Disclosure of accounting policies 117 – 124 Sources of estimation uncertainty 125 – 133 Capital 134 – 136 Financial instruments with put options classified as equity 136A Other disclosures 137 – 138
Appendix A – Example

Objective

The objective of this Technical Pronouncement is to define the basis for the presentation of financial statements, to ensure comparability both with the financial statements of the same entity for prior periods and with the financial statements of other entities. In this context, this Pronouncement establishes general requirements for the presentation of financial statements, guidelines for their structure, and minimum requirements for their content.

Scope
2. This Pronouncement shall be applied to all financial statements prepared and presented in accordance with the Pronouncements, Guidelines, and Interpretations of the Accounting Pronouncements Committee (CPC).

The recognition, measurement, and disclosure of specific transactions and other events are the subject of other Pronouncements, Guidelines, and Interpretations.
This Pronouncement does not apply to the structure and content of condensed interim financial statements prepared in accordance with Technical Pronouncement CPC 21 – Interim Statement. However, items 13 to 35 apply to such interim financial statements. This Pronouncement also applies to all entities, including those that present consolidated financial statements or separate financial statements, as defined in Technical Pronouncements CPC 35 – Separate Financial Statements and CPC 36 – Consolidated Financial Statements.
This Pronouncement uses terminology that is appropriate for profit-oriented entities, including business entities in the public sector. If not-for-profit entities in the private or public sector apply this Pronouncement, they may need to adjust the descriptions used for specific items in the financial statements and even for the financial statements themselves.
Similarly, entities that do not have equity as defined in Technical Pronouncement CPC 39 – Financial Instruments: Presentation, such as some investment funds, and entities whose capital is not equity (e.g., some cooperative entities), may need to adapt the presentation in the financial statements of the interests and participations of their members or owners.

Definitions
7. The terms below are used in this pronouncement with the following meanings:

General purpose financial statements (referred to simply as financial statements) are those whose purpose is to meet the information needs of external users who are not in a position to require reports specifically tailored to meet their particular needs.

Impracticable application – The application of a requirement is impracticable when the entity cannot apply it after having made all reasonable efforts to do so.

Brazilian accounting practices comprise Brazilian corporate law, the Pronouncements, Interpretations, and Guidelines issued by the CPC and approved by regulatory bodies, and practices adopted by entities on unregulated matters, provided they meet the Basic Conceptual Framework for the Preparation and Disclosure of Financial Reporting Pronouncement issued by the CPC and, consequently, are in consonance with international accounting standards.

Material – Information is material if its omission, misstatement, or obscurity could reasonably influence the decisions that primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

Materiality depends on the nature or magnitude of the information, or both. The entity assesses whether information, individually or in combination with other information, is material in the context of its financial statements taken as a whole.

Information is obscure if it is communicated in a way that would have a similar effect, for the primary users of the financial statements, to the omission or error of that information. The following are examples of circumstances that may result in the obscuring of relevant information:
(a) information relating to the item, transaction, or other event of relevance is disclosed in the financial statements, but the language used is vague or unclear; (b) information relating to the item, transaction, or other event of relevance is scattered throughout the financial statements; (c) distinct items, transactions, or other events are aggregated inappropriately; (d) similar items, transactions, or other events are disaggregated inappropriately; and (e) the understandability of the financial statements is reduced as a result of material information being obscured by immaterial information, to the extent that the primary user cannot determine which information is relevant.

Assessing whether it could be reasonably expected that the information would influence the decisions made by the primary users of general purpose financial statements for a specific entity requires the entity to consider the characteristics of those users and, at the same time, consider the entity’s own circumstances.

Many investors, lenders, and other existing and potential creditors cannot demand that the reporting entity provide information directly to them and must rely on general purpose financial statements for much of the financial information they need. Consequently, they are the primary users to whom general purpose financial statements are directed. Financial statements are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyze the information with diligence. Sometimes, even well-informed and diligent users may need to seek help from a consultant to understand information about complex economic phenomena.

Notes contain information in addition to that presented in the financial statements. The notes provide narrative descriptions or disaggregations and breakdowns of items disclosed in those statements and information about items that do not meet the recognition criteria in the financial statements.

Other comprehensive income comprises items of income and expense (including reclassification adjustments) that are not recognized in profit or loss as required or permitted by the pronouncements, interpretations, and guidelines issued by the CPC. The components of other comprehensive income include:
(a) changes in the revaluation reserve, when legally permitted (see Technical Pronouncements CPC 27 – Property, Plant and Equipment and CPC 04 – Intangible Assets); (b) actuarial gains and losses on defined benefit pension plans recognized in accordance with item 93A of Technical Pronouncement CPC 33 – Employee Benefits; (c) gains and losses arising from the translation of financial statements of foreign operations (see Technical Pronouncement CPC 02 – Effects of Changes in Foreign Exchange Rates and Translation of Financial Statements); (d) gains and losses resulting from investments in equity instruments designated at fair value through other comprehensive income, in accordance with item 5.7.5 of CPC 48 – Financial Instruments; (da) gains and losses on financial assets measured at fair value through other comprehensive income, in accordance with item 4.1.2A of CPC 48; (e) the effective portion of gains and losses on hedging instruments in a cash flow hedge and the gains and losses on hedging instruments that hedge investments in equity instruments measured at fair value through other comprehensive income, in accordance with item 5.7.5 of CPC 48 (see Chapter 6 of CPC 48); (f) for specific liabilities designated as at fair value through profit or loss, the amount of the change in fair value that is attributable to changes in the credit risk of the liability (see item 5.7.7 of CPC 48); (g) change in the time value of options when separating the intrinsic value and the time value of the option contract and designating as a hedging instrument only the changes in intrinsic value (see Chapter 6 of CPC 48); and (h) change in the value of the forward elements of forward contracts when separating the forward element and the spot element of the forward contract and designating, as a hedging instrument, only the changes in the spot element, and changes in the value of the spread based on the foreign currency of the financial instrument when excluding it from the designation of that financial instrument as a hedging instrument (see Chapter 6 of CPC 48).

Owner is the holder of instruments classified as equity.

Profit or loss for the period is the total of revenues minus expenses, except for items recognized as other comprehensive income in equity.

Reclassification adjustment is the amount reclassified to profit or loss in the current period that was initially recognized as other comprehensive income in the current period or in a prior period.

Comprehensive income is the change in equity during a period that results from transactions and other events, other than transactions with owners in their capacity as owners.

Comprehensive income comprises all components of the “statement of profit or loss” and the “statement of other comprehensive income.”

Although this Pronouncement uses the terms “other comprehensive income,” “profit or loss,” and “comprehensive income,” the entity may use other terms to describe the totals provided that the meaning is clear. For example, the entity may use the term “net profit” to describe “profit or loss.” It is suggested, however, for ease of communication, to adhere as closely as possible to the terms used in this Pronouncement.

8A. The following terms are described in Technical Pronouncement CPC 39 – Financial Instruments: Presentation and are used in this Pronouncement with the meanings employed there:
(a) financial instrument with a put option held by its holder, classified as an equity instrument (described in items 16A and 16B of Technical Pronouncement CPC 39); (b) instrument that imposes on the entity an obligation to deliver to the counterparty a pro rata share of its net assets (equity) only in the event of the liquidation of the entity and is classified as an equity instrument (described in items 16C and 16D of Technical Pronouncement CPC 39).

Financial Statements
Purpose of financial statements
9. Financial statements are a structured representation of the financial position and performance of an entity. The objective of financial statements is to provide information about the financial position, performance, and cash flows of an entity that is useful to a wide range of users in their assessments and economic decision-making. Financial statements also aim to present the results of management’s stewardship, in relation to its duties and responsibilities for the diligent management of the resources entrusted to it. To satisfy this objective, financial statements provide information about the entity regarding the following:
(a) assets;
(b) liabilities;
(c) equity;
(d) revenues and expenses, including gains and losses; (e) changes in equity through contributions by owners and distributions to them; and (f) cash flows.

This information, together with other information in the notes, helps users of financial statements to predict the entity’s future cash flows and, in particular, the timing and certainty of their generation.

Complete set of financial statements
10. The complete set of financial statements comprises:
(a) a statement of financial position at the end of the period; (b1) a statement of profit or loss for the period; (b2) a statement of comprehensive income for the period; (c) a statement of changes in equity for the period; (d) a statement of cash flows for the period; (e) notes, comprising significant accounting policies and other explanatory information; (ea) comparative information in respect of the preceding period, as specified in items 38 and 38A; (f) a statement of financial position at the beginning of the earliest comparative period when the entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements in accordance with items 40A to 40D; and (f1) a statement of added value for the period, in accordance with Technical Pronouncement CPC 09, if required by law or by some regulatory body or even if presented voluntarily.

The entity may use other titles for the statements instead of those used in this Technical Pronouncement, provided that it does not conflict with the current Brazilian corporate law.

10A. The entity may, if legally permitted, present a single statement of profit or loss and other comprehensive income, with the statement of profit or loss and other comprehensive income presented in two sections. The sections must be presented together, with the profit or loss for the period presented first, followed by the other comprehensive income section. The entity may present the statement of profit or loss as a separate statement. In that case, the separate statement of profit or loss for the period will immediately precede the statement that presents comprehensive income, which begins with profit or loss for the period.

10B. When this Technical Pronouncement was approved, it should be noted that Brazilian corporate law requires that the statement of profit or loss for the period be presented as a separate section.

The entity shall present with equal prominence all the financial statements that are part of the complete set of financial statements.
(Eliminated).
Many entities present, outside the financial statements, management’s commentary that describes and explains the main features of the entity’s performance and financial and economic position and the main uncertainties to which it is subject. This report may include the analysis:
(a) of the main factors and influences that determine performance, including changes in the environment in which the entity operates, the entity’s response to these changes and their effect, and the entity’s investment policy to maintain and improve performance, including its dividend policy; (b) of the entity’s sources of financing and the intended relationship between liabilities and equity; and (c) of the entity’s resources not recognized in the financial statements in accordance with the Technical Pronouncements, Interpretations, and Guidelines of the CPC.
Many entities also present, outside the financial statements, reports and statements such as environmental and social reports, especially in sectors where environmental and social factors are significant and when employees are considered an important group of users. The reports and statements presented outside the financial statements are outside the scope of the Pronouncements issued by the CPC.

General considerations
Fair presentation and compliance with Brazilian accounting practices
15. Financial statements shall present fairly the financial position, performance, and cash flows of an entity. For a fair presentation, it is necessary a faithful representation of the effects of transactions, other events, and conditions in accordance with the definitions and recognition criteria for assets, liabilities, revenues, and expenses as established in CPC 00 – Conceptual Framework for Financial Reporting. It is presumed that the application of the technical pronouncements, interpretations, and guidelines of the CPC, with disclosure

SECURITY AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Centro, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.gov.br/cvm

RESOLUTION CVM NO. 106, OF MAY 20, 2022

additional when necessary, results in financial statements that qualify as a fair presentation.

An entity whose financial statements are in conformity with the Technical Pronouncements, Interpretations and Orientations of the CPC must explicitly and without qualification declare such conformity in the notes to the financial statements. The entity must not assert that its financial statements are in accordance with these Technical Pronouncements, Interpretations and Orientations unless it has complied with all their requirements.
In virtually all circumstances, fair presentation is achieved by compliance with the applicable Technical Pronouncements, Interpretations and Orientations of the CPC. Fair presentation also requires the entity to:
(a) select and apply accounting policies in accordance with Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors. This Pronouncement establishes a hierarchy of guidance that management must follow in the absence of a Technical Pronouncement, Interpretation and Orientation that applies specifically to an item; (b) present information, including its accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; (c) provide additional disclosures when compliance with the specific requirements contained in the Technical Pronouncements, Interpretations and Orientations of the CPC is insufficient to enable users to understand the impact of certain transactions, other events and conditions on the entity’s financial position and equity and performance.
The entity must not rectify inappropriate accounting policies by disclosing the accounting policies used or by means of notes to the financial statements or any other explanatory disclosure.
In extremely rare circumstances, where management concludes that compliance with a requirement of a Technical Pronouncement, Interpretation or Orientation of the CPC would result in a presentation so misleading that it would conflict with the objective of financial statements established in CPC 00, the entity must not apply that requirement and must follow the provisions of item 20, unless such a procedure is strictly prohibited from a legal and regulatory standpoint.
When the entity does not apply a requirement of a Technical Pronouncement, Interpretation or Orientation of the CPC or in accordance with item 19, it must disclose:
(a) that management has concluded that the financial statements present fairly the financial position and equity, performance and cash flows of the entity; (b) that it has applied the applicable Technical Pronouncements, Interpretations and Orientations of the CPC, except for the non-application of a specific requirement for the purpose of obtaining fair presentation; (c) the title of the Technical Pronouncement, Interpretation or Orientation of the CPC that the entity did not apply, the nature of that exception, including the treatment that the Technical Pronouncement, Interpretation or Orientation of the CPC would require; the reason why that treatment would be so misleading that it would conflict with the objective of financial statements, established in CPC 00; and the treatment actually adopted; and (d) for each period presented, the financial impact of not applying the Technical Pronouncement, Interpretation or Orientation of the CPC in effect on each item in the financial statements that would have been reported, had the unapplied requirement been complied with.
When the entity does not apply a requirement of a Technical Pronouncement, Interpretation or Orientation of the CPC in a prior period, and that procedure affects the amounts recognized in the current period’s financial statements, it must proceed with the disclosure established in items 20(c) and 20(d).
Item 21 applies, for example, when the entity fails to adopt in a prior period a certain requirement for the measurement of assets or liabilities, contained in a Technical Pronouncement, Interpretation or Orientation of the CPC, and that procedure has impacts on the measurement of changes in assets and liabilities recognized in the current period’s financial statements.
In extremely rare circumstances, where management concludes that compliance with a requirement of a Technical Pronouncement, Interpretation or Orientation of the CPC would result in a presentation so misleading that it would conflict with the objective of financial statements established in CPC 00, but the prevailing regulatory structure prohibits the non-application of the requirement, the entity must, to the greatest extent possible, reduce the identified inappropriate aspects in strict compliance with the Technical Pronouncement, Interpretation or Orientation of the CPC by disclosing:
(a) the title of the Technical Pronouncement, Interpretation or Orientation of the CPC in question, the nature of the requirement and the reasons that led management to conclude that compliance with that requirement would make the financial statements so misleading that they would conflict with the objective of financial statements established in CPC 00; and (b) for each period presented, the adjustments of each item in the financial statements that management concluded were necessary to obtain fair presentation.
For the purposes of items 19 to 23, an item of information conflicts with the objective of financial statements when it does not faithfully represent the transactions, other events and conditions it purports to represent, or that could reasonably be expected to represent, and consequently, it is likely to influence the economic decisions taken by users of the financial statements. In assessing whether compliance with a specific requirement of a Technical Pronouncement, Interpretation or Orientation of the CPC would result in disclosure so distorted as to conflict with the objective of financial statements, established in CPC 00, management must consider:
(a) the reason why the objective of financial statements is not achieved in that particular circumstance; and (b) how the entity’s circumstances differ from the circumstances of other entities that comply with the requirement. If other entities in similar circumstances comply with the requirement, there is a rebuttable presumption that the entity’s compliance with the requirement would not result in such misleading disclosure and, therefore, would not conflict with the objective of financial statements, established in CPC 00.

Going Concern

In preparing financial statements, management must make an assessment of the entity’s ability to continue in operation in the foreseeable future. Financial statements must be prepared on the going concern basis, unless management intends to liquidate the entity or to cease its operations, or has no realistic alternative but to discontinue its activities. When management is aware, in making its assessment, of relevant uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue in operation in the foreseeable future, these uncertainties must be disclosed. When financial statements are not prepared on the going concern basis, that fact must be disclosed, together with the bases on which the financial statements were prepared and the reason why the entity’s going concern is not assumed.
In assessing whether the going concern assumption is appropriate, management must take into account all available information about the future, which is the minimum period (but not limited to that period) of twelve months from the balance sheet date. The degree of consideration depends on the facts of each case. When the entity has a history of profitable operations and ready access to financial resources, the conclusion regarding the appropriateness of the going concern assumption may be reached without detailed analysis. In other cases, management may need the analysis of a wide range of factors related to current and expected profitability, debt settlement schedules and potential alternative sources of financing in order to support its conclusion that the going concern assumption in the foreseeable future is adequate for that entity.

Accrual Basis

The entity must prepare its financial statements, except for the statement of cash flows, using the accrual basis.
When the accrual basis is used, items must be recognized as assets, liabilities, equity, income and expenses (elements of financial statements) when they satisfy the definitions and recognition criteria for those elements contained in CPC 00.

Materiality and Aggregation

The entity must present separately in the financial statements each material class of similar items. The entity must present separately items of distinct nature or function, unless they are immaterial.
Financial statements result from the processing of a large number of transactions or other events that are aggregated into classes according to their nature or function. The final stage of the aggregation and classification process is the presentation of condensed and classified data that form items of the financial statements. If an item is not individually material, it must be aggregated with other items, either in the financial statements or in the notes to the financial statements. An item may not be sufficiently material to justify its individual presentation in the financial statements, but may be sufficiently material to be presented individually in the notes to the financial statements.

30A. In applying this and other pronouncements, the entity must decide, taking into consideration all relevant facts and circumstances, how it aggregates information in the financial statements, which include the notes to the financial statements. The entity must not reduce the understandability of its financial statements by hiding material information with immaterial information or by aggregating items of material significance that have different nature or functions.

Some pronouncements specify the information that must be included in the financial statements, which include the notes to the financial statements. The entity does not need to provide a specific disclosure required by a Technical Pronouncement, Interpretation or Orientation of the CPC if the information resulting from the disclosure is not material. This is the case even if the pronouncement contains a list of specific requirements or describes them as minimum requirements. The entity must also consider the possibility of providing additional disclosures when compliance with specific requirements in the pronouncements is insufficient to enable users of the financial statements to understand the impact of certain transactions, other events and conditions on the entity’s financial position and performance.

Offsetting

The entity must not offset assets and liabilities or income and expenses, unless the offsetting is required or permitted by a Technical Pronouncement, Interpretation or Orientation of the CPC.
The entity must report assets and liabilities, income and expenses separately. The offsetting of these elements in the balance sheet or in the statement of income, except when it reflects the essence of the transaction or other event, impairs the ability of users to understand the transactions, other events and conditions that have occurred and to assess the entity’s future cash flows. The measurement of assets net of related provisions, such as, for example, provisions for inventory obsolescence or provisions for doubtful accounts receivable from customers, is not considered offsetting.
CPC 47 – Revenue from Contracts with Customers requires that the entity measure revenue from a contract with a customer by the amount of consideration to which the entity expects to be entitled in exchange for transferring promised goods or services. For example, the amount of revenue recognized must reflect the amount of any trade discounts and volume rebates granted by the entity. The entity develops, in the course of its ordinary activities, other transactions that do not strictly generate revenue, but that are incidental to the main revenue-generating activities. The results of such transactions must be presented, when this presentation reflects the essence of the transaction or other event, by offsetting any revenues with the related expenses resulting from the same transaction. For example:
(a) gains and losses on the disposal of non-current assets, including investments and operating assets, must be presented net, deducting from the disposal consideration the carrying amount of the asset and recognizing the related selling expenses; and (b) expenses related to a provision recognized in accordance with CPC 25 – Provisions, Contingent Liabilities and Contingent Assets and that were reimbursed under a contractual agreement with third parties (for example, a supplier warranty agreement) may be offset with the respective reimbursement.
Additionally, gains and losses arising from a group of similar transactions must be presented on a net basis, for example, gains and losses from exchange differences or gains and losses from financial instruments classified as held for trading. Notwithstanding, these gains and losses must be presented separately if they are material.

Frequency of Presentation of Financial Statements

The complete set of financial statements must be presented at least annually (including comparative information). When the entity changes the closing date of its financial statements and the financial statements are presented for a period longer or shorter than one year, the entity must disclose, in addition to the period covered by the financial statements:
(a) the reason for using a longer or shorter period; and (b) the fact that the comparative amounts presented in these statements are not entirely comparable.
(Eliminated).

Comparative Information

Unless a Technical Pronouncement, Interpretation or Orientation of the CPC allows or requires otherwise, the entity must disclose comparative information with respect to the previous period for all amounts presented in the current period’s financial statements. Narrative and descriptive information that is to be presented when relevant to the understanding of the complete set of statements of the current period must also be presented comparatively.

38A. The entity must present as minimum information two balance sheets, two statements of income and comprehensive income, two statements of income (if presented separately), two statements of cash flows, two statements of changes in equity and two statements of added value (if presented), as well as their respective notes to the financial statements.

38B. In some cases, the narrative information provided in the financial statement(s) of the prior period(s) continues to be relevant in the current period. For example, the entity discloses in the current period the details of a legal dispute, the outcome of which was uncertain at the end of the prior period and is still to be resolved. Users may benefit from the disclosure of information that the uncertainty existed at the end of the prior period and from the disclosure of information about the measures that were taken during the period to resolve the uncertainty.

Additional Comparative Information

38C. The entity may present additional comparative information beyond the minimum required by the Technical Pronouncements for the financial statements, provided that the information is prepared in accordance with the Technical Pronouncements. This comparative information may consist of one or more of the statements referred to in item 10, but does not need to comprise the complete set of financial statements. When this is the case, the entity must

RESOLUTION CVM NO. 106, OF MAY 20, 2022

present in the notes to the financial statements information regarding these additional statements.

38D. For example, the entity may present comparatively a third statement of income and other comprehensive income (thus presenting the current period, the prior period and an additional comparative period). However, the entity is not required to present a third balance sheet, statement of cash flows, statement of changes in equity, or statement of added value (if presented), (i.e., an additional comparative accounting statement). The entity is required to present, in the notes to the financial statements, the additional comparative information relating to the statement of income and the statement of other comprehensive income.

39-40. (Eliminated).

Change in Accounting Policy, Retrospective Restatement or Reclassification

40A. The entity must present a third balance sheet at the beginning of the prior period, in addition to the minimum comparative financial statements required in item 38A if:
(a) it applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial statements or reclassifies items from its financial statements; and (b) the retrospective application, retrospective restatement or reclassification has a material effect on the information in the balance sheet at the beginning of the prior period.

40B. In the circumstances described in item 40A, the entity must present three balance sheets at:
(a) the end of the current period;
(b) the end of the prior period; and
(c) at the beginning of the preceding period.

40C. When the entity is required to present an additional balance sheet, in accordance with item 40A, it must disclose the information required by items 41 to 44 and by Technical Pronouncement CPC 23. However, it will not need to present the notes to the financial statements related to the opening balance sheet at the beginning of the prior period.

40D. The date of the opening balance sheet must be equal to the date of the prior period, regardless of whether the entity’s financial statements present comparative information for older periods (as provided in item 38C).

When the presentation or classification of items in the financial statements is modified, the amounts presented for comparative purposes must be reclassified, unless reclassification is impracticable. When the amounts presented for comparative purposes are reclassified, the entity must disclose:
(a) the nature of the reclassification;
(b) the amount of each item or class of items that was reclassified; and (c) the reason for the reclassification.
When it is impracticable to reclassify amounts presented for comparative purposes, the entity

SECURITY AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – CEP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/SP – CEP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – CEP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.gov.br/cvm

CVM RESOLUTION NO. 106, OF MAY 20, 2022

must disclose:
(a) the reason for not reclassifying the amounts; and (b) the nature of the adjustments that would have been made if the amounts had been reclassified.

Improving the comparability of information between periods helps users make economic decisions, especially because it allows them to assess trends in financial information for forecasting purposes. In some circumstances, it becomes impracticable to reclassify comparative information for a prior period to obtain comparability with the current period. For example, the necessary data for the comparative presentation of the prior period with the current period may not have been collected, thereby allowing reclassification, and consequently, it may not be practicable to reconstruct that information.
Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors defines the adjustments required for comparative information when the entity changes an accounting policy or corrects an error.

Consistency of presentation

The presentation and classification of items in the financial statements must be maintained from one period to another, unless:
(a) it is evident, after a significant change in the nature of the entity's operations or a review of its financial statements, that another presentation or classification is more appropriate, given the criteria for the selection and application of accounting policies contained in Technical Pronouncement CPC 23; or (b) another Technical Pronouncement, Interpretation, or Guidance from CPC requires a change in presentation.
For example, a significant acquisition or disposal, or a review of the presentation of the financial statements, may indicate that the financial statements should be presented differently. The entity must change the presentation of its financial statements only if the modification in presentation provides information that is reliable and more relevant to the users of the financial statements and if it is likely that the revised structure will continue, so that comparability is not impaired. When making such changes in presentation, the entity must reclassify the comparative information presented in accordance with items 41 and 42.

Structure and content
Introduction

This Pronouncement requires certain disclosures in the balance sheet, the statement of comprehensive income, the statement of income, and the statement of changes in equity, and requires disclosure of other items in these financial statements or in the notes. Technical Pronouncement CPC 03 – Statement of Cash Flows establishes the requirements for the presentation of information on cash flows.
This Pronouncement sometimes uses the term "disclosure" in a broad sense, encompassing items presented in the financial statements and notes. Disclosures are also required

CVM RESOLUTION NO. 106, OF MAY 20, 2022

by other Technical Pronouncements, Interpretations, and Guidance from CPC. Unless specified otherwise, such disclosures may be included in the financial statements.

Identification of financial statements

The financial statements must be clearly identified and distinguished from any other information that may be contained in the same published document.
Brazilian accounting practices apply only to the financial statements and not necessarily to information presented in another annual report, regulatory report, or any other document. Therefore, it is important that users can distinguish information prepared using Brazilian accounting practices from any other information that may be useful to their users but is not subject to the requirements of said practices.
Each financial statement and its respective notes must be clearly identified. In addition, the following information must be disclosed prominently and repeated when necessary for the proper understanding of the information presented:
(a) the name of the entity to which the financial statements refer or another means that allows its identification, as well as any change that may have occurred in this identification since the end of the previous period; (b) whether the financial statements refer to an individual entity or a group of entities; (c) the closing date of the reporting period or the period covered by the set of financial statements or notes; (d) the presentation currency, as defined in Technical Pronouncement CPC 02 – Effects of Changes in Foreign Exchange Rates and Conversion of Financial Statements; and (e) the level of rounding used in the presentation of values in the financial statements.
The requirements of item 51 are normally satisfied by the appropriate presentation of page headers, statement titles, note titles, column titles, and similar elements on each page of the financial statements. In determining the best way to present such information, judgment is required. For example, when financial statements are presented electronically, separate pages may not always be used; the items above must then be presented frequently enough to ensure the proper understanding of the information included in the financial statements.
Financial statements often become more understandable by presenting information in thousands or millions of units of the presentation currency. This procedure is acceptable provided that the level of rounding in the presentation is disclosed and material information is not omitted.

Balance sheet
Information to be presented in the balance sheet

The balance sheet must present, respecting the legislation, the following accounts:
(a) cash and cash equivalents;

CVM RESOLUTION NO. 106, OF MAY 20, 2022

(b) customers and other receivables;
(c) inventories;
(d) financial assets (except those mentioned in items “a”, “b”, and “g”); (e) total assets classified as held for sale and assets held for sale in accordance with CPC 31 – Non-Current Asset Held for Sale and Discontinued Operations; (f) biological assets within the scope of CPC 29; (g) investments evaluated using the equity method; (h) investment property; (i) fixed assets; (j) intangible assets; (k) commercial payables and others; (l) provisions; (m) financial liabilities (except those referred to in items “k” and “l”); (n) current tax liabilities and assets, as defined in Technical Pronouncement CPC 32 – Income Taxes; (o) deferred tax assets and liabilities, as defined in Technical Pronouncement CPC 32; (p) liabilities associated with assets held for sale in accordance with Technical Pronouncement CPC 31; (q) non-controlling interest presented prominently within equity; and (r) paid-in capital, reserves, and other accounts attributable to the owners of the entity.

The entity must present additional accounts (by disaggregating accounts listed in item 54), headers, and subtotals in the balance sheets whenever they are relevant to understanding the financial and equity position of the entity.

55A. When the entity presents subtotals in accordance with item 55, these subtotals must:
(a) be composed of accounts made up of values recognized and measured in accordance with CPC pronouncements; (b) be presented and named in such a way that the accounts constituting the subtotals are clear and understandable; (c) be consistent from period to period, in accordance with item 45; and (d) not be displayed with more prominence than the subtotals and totals required in the pronouncement for the balance sheet.

In the situation where the entity presents its current and non-current assets and liabilities separately, deferred tax assets (liabilities) must not be classified as current assets (current liabilities).
This Technical Pronouncement does not prescribe the order or format that must be used in the presentation of balance sheet accounts, but the order legally established in Brazil must be observed. Item 54 simply lists the items that are sufficiently different in their nature or function to ensure individualized presentation in the balance sheet. Additionally:
(a) balance sheet accounts must be included whenever the size, nature, or function of an item or aggregation of similar items presented separately is relevant to understanding the financial position of the entity;

CVM RESOLUTION NO. 106, OF MAY 20, 2022

(b) the account nomenclature used and its order of presentation or aggregation of similar items may be modified according to the nature of the entity and its transactions, in order to provide information that is relevant to understanding the financial and equity position of the entity. For example, a financial institution may have to modify the aforementioned nomenclature in order to provide relevant information in the context of financial institution operations.

The entity must judge the adequacy of presenting additional separate accounts based on the assessment:
(a) of the nature and liquidity of assets;
(b) of the function of assets in the entity; and (c) of the amounts, nature, and term of liabilities.
The use of different measurement criteria for different classes of assets suggests that their natures or functions are distinct and, therefore, should be presented in separate accounts. For example, different classes of fixed assets may be recognized at cost or at revalued amount, when legally permitted, in accordance with Technical Pronouncement CPC 27 – Property, Plant and Equipment.

Distinction between current and non-current

The entity must present current and non-current assets, and current and non-current liabilities, as separate groups of accounts in the balance sheet, in accordance with items 66 to 76, unless a presentation based on liquidity provides reliable and more relevant information. When this exception is applicable, all assets and liabilities must be presented in order of liquidity.
Regardless of the presentation method adopted, the entity must disclose the amount expected to be recovered or settled within twelve months or more than twelve months after the reporting period, for each item of asset and liability.
When the entity provides goods or services within a clearly identifiable operating cycle, the separate classification of current and non-current assets and liabilities in the balance sheet provides useful information to distinguish net assets that are continuously in circulation as working capital from those used in the entity's long-term operations. This classification should also highlight assets that are expected to be realized within the current operating cycle, as well as liabilities that are to be settled within the same period.
For some entities, such as financial institutions, the presentation of assets and liabilities in ascending or descending order of liquidity provides information that is reliable and more relevant than the presentation in current and non-current, since such entities do not provide goods or services within a clearly identifiable operating cycle.
In applying item 60, the entity is allowed to present some of its assets and liabilities using the current and non-current classification and others in order of liquidity when this procedure provides reliable and more relevant information. The need for

CVM RESOLUTION NO. 106, OF MAY 20, 2022

presentation on a mixed basis may arise when the entity has various types of operations.

Information regarding the expected dates for the realization of assets and the settlement of liabilities is useful in assessing the liquidity and solvency of the entity. Technical Pronouncement CPC 40 – Financial Instruments: Disclosure requires disclosure of the maturity dates of financial assets and financial liabilities. Financial assets include commercial receivables and other receivables, and financial liabilities include commercial payables and others. Information on the expected date for the recovery and settlement of non-monetary assets and liabilities, such as inventories and provisions, is also useful, regardless of the classification of these assets and liabilities as current or non-current. For example, the entity must disclose the amount of inventories expected to be recovered after twelve months from the balance sheet date.

Current asset

An asset must be classified as current when it satisfies any of the following criteria:
(a) it is expected to be realized, or is intended to be sold or consumed in the normal course of the entity's operating cycle; (b) it is held essentially for the purpose of being traded; (c) it is expected to be realized within twelve months after the balance sheet date; or (d) it is cash or a cash equivalent (as defined in Technical Pronouncement CPC 03 – Statement of Cash Flows), unless its exchange or use for the settlement of a liability is restricted for at least twelve months after the balance sheet date. All other assets must be classified as non-current.
This Pronouncement uses the expression "non-current" to include tangible assets, intangible assets, and long-term nature financial assets. The use of alternative descriptions is not prohibited provided their meaning is clear.

67A. Non-current assets must be subdivided into long-term realizable, investments, fixed assets, and intangibles.

The entity's operating cycle is the time between the acquisition of assets for processing and their realization in cash or their equivalents. When the entity's normal operating cycle is not clearly identifiable, it is assumed that its duration is twelve months. Current assets include assets (such as inventory and commercial accounts receivable) that are sold, consumed, or realized as part of the normal operating cycle, even when they are not expected to be realized within the period of up to twelve months after the balance sheet date. Current assets also include assets held essentially for the purpose of being traded (for example, some financial assets that meet the definition of held for trading in CPC 48 – Financial Instruments) and the current portion of non-current financial assets.

Current liability

A liability must be classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled during the normal operating cycle of the entity; (b) it is held essentially for the purpose of being traded; (c) it is to be settled within twelve months after the balance sheet date; or

CVM RESOLUTION NO. 106, OF MAY 20, 2022

(d) the entity does not have an unconditional right to defer the settlement of the liability for at least twelve months after the balance sheet date (see item 73). The terms of a liability that may, at the counterparty's option, result in its settlement through the issuance of equity instruments must not affect its classification. All other liabilities must be classified as non-current.

Some current liabilities, such as commercial payables and some accruals related to employee expenses and other operating costs, are part of the working capital used in the normal operating cycle of the entity. Such operational items are classified as current liabilities even if they are to be settled in more than twelve months after the balance sheet date. The same normal operating cycle applies to the classification of the entity's assets and liabilities. When the entity's normal operating cycle is not clearly identifiable, it is assumed that its duration is twelve months.
Other current liabilities are not settled as part of the normal operating cycle, but their settlement is expected for the period of up to twelve months after the balance sheet date or they are held essentially for the purpose of being traded. Examples of this are some financial liabilities that meet the definition of held for trading in CPC 48, bank overdraft balances, and the current portion of non-current financial liabilities, dividends payable, income tax, and other non-commercial payables. Financial liabilities that provide long-term financing (i.e., do not form part of the working capital used in the normal operating cycle of the entity) and whose settlement is not expected for the period of up to twelve months after the balance sheet date are non-current liabilities, subject to items 74 and 75.
The entity must classify its financial liabilities as current when their settlement is expected for the period of up to twelve months after the balance sheet date, even if:
(a) the original term for their settlement was for a period longer than twelve months; and (b) a refinancing agreement, or long-term payment rescheduling, is completed after the balance sheet date and before the financial statements are authorized for publication.
If the entity has the expectation, and has discretionary power, to refinance or roll over an obligation for at least twelve months after the balance sheet date under an existing loan contract provision, it must classify the obligation as non-current, even if it would otherwise be due within a shorter period. However, when the refinancing or rollover of the obligation does not depend solely on the entity (for example, if there is no refinancing agreement), the mere potential for refinancing is not considered sufficient for classification as non-current, and therefore the obligation is classified as current.
When the entity breaches a contractual agreement (covenant) of a long-term loan (debt ratio or interest coverage ratio, for example) at the end or before the end of the reporting period, making the liability due and payable to the creditor at the creditor's request, the liability must be classified as current even if the creditor has agreed, after the balance sheet date and before the date of authorization for the issuance of the financial statements, not to demand early payment as a consequence of the covenant breach. The liability must be classified as current because, at the balance sheet date, the entity does not have the unconditional right to defer its

CVM RESOLUTION NO. 106, OF MAY 20, 2022

settlement for at least twelve months after the balance sheet date. The liability is classified as current because the entity did not have the right to defer the settlement at the balance sheet date.

liquidation for at least twelve months after that date.
75. However, the liability must be classified as non-current if the creditor has agreed, by the balance sheet date, to provide an extension of time, ending at least twelve months after the balance sheet date, within which the entity may rectify the breach of contractual covenant (repositioning in debt and interest coverage ratios, for example) and during which the creditor may not demand immediate settlement of the liability in question.
76. With respect to loans classified as current liabilities, if the events that follow occur between the balance sheet date and the date on which the financial statements are authorized for issue, these events will be qualified for disclosure as events that do not originate adjustments in accordance with Technical Pronouncement CPC 24 – Subsequent Event:
(a) refinancing on a long-term basis;
(b) rectification of a breach of long-term loan covenant; and (c) grant by the creditor of an extension of time to rectify the breach of contractual covenant (repositioning in debt and interest coverage ratios, for example) of a long-term loan, which ends at least twelve months after the balance sheet date.

Information to be presented in the balance sheet or in the notes
77. The entity must disclose, either in the balance sheet or in the notes, additional line items to the accounts presented (sub-classifications), classified appropriately to the entity's operations.
78. The detail provided in the sub-classifications depends on the requirements of the Technical Pronouncements, Interpretations and Guidelines of the CPC and the size, nature and function of the amounts involved. The factors established in item 58 are also used to decide the bases to be used for such sub-classification. The disclosures vary for each item, for example:
(a) fixed asset items are segregated into classes in accordance with Technical Pronouncement CPC 27 – Fixed Assets; (b) accounts receivable are segregated into amounts receivable from commercial customers, accounts receivable from related parties, advance payments and other amounts; (c) inventories are segregated, in accordance with Technical Pronouncement CPC 16 – Inventories, into classifications such as merchandise for resale, inputs, materials, work in progress and finished products; (d) provisions are segregated into provisions for employee benefits and other items; and (e) capital and reserves are segregated into various classes, such as subscribed and paid-up capital, share premiums and reserves.
79. The entity must disclose the following either in the balance sheet, in the statement of changes in equity or in the notes:
(a) for each class of share capital:
(i) the number of shares authorized;
(ii) the number of shares subscribed and fully paid, and subscribed but not fully paid; (iii) the nominal value per share, or state that the shares have no nominal value; (iv) the reconciliation between the number of shares in circulation at the beginning and at the end of the period;

(v) the rights, preferences and restrictions associated with that class of shares, including restrictions on the distribution of dividends and on the repayment of capital; (vi) shares or quotas of the entity held by the entity itself (treasury shares or quotas) or by controlled or affiliated companies; and (vii) shares reserved for issuance due to options and contracts for the sale of shares, including the terms and respective amounts; and (b) a description of the nature and purpose of each reserve within equity.
80. The entity without capital represented by shares, such as a limited liability company or a trust, must disclose information equivalent to that required in item 79(a), showing the changes during the period in each category of equity participation and the rights, preferences and restrictions associated with each category of equity instrument.
80A. If the entity has reclassified
(a) a financial instrument with a put option classified as an equity instrument, or (b) an instrument that imposes on the entity the obligation to deliver to the counterparty a pro rata amount of its net assets (equity) only upon the liquidation of the entity and is classified as an equity instrument between financial liabilities and equity, it must disclose the amount reclassified into and out of each category (financial liabilities or equity), and the timing and reason for that reclassification.

Statement of profit or loss and statement of comprehensive income
81. (Eliminated).
81A. The statement of profit or loss and other comprehensive income (statement of comprehensive income) must present, in addition to the sections of the statement of profit or loss and other comprehensive income:
(a) the total of profit (for the period);
(b) total of other comprehensive income;
(c) comprehensive income for the period, being the total of profit and other comprehensive income.
If the entity presents the statement of profit or loss separate from the statement of comprehensive income ( 1 ), it must not present the statement of profit or loss included in the statement of comprehensive income.
81B. The entity must present the following items, in addition to the statement of profit or loss and other comprehensive income, as an allocation of the statement of profit or loss and other comprehensive income for the period:
(a) profit for the period attributable to: (i) non-controlling interests, and (ii) shareholders of the parent; (b) comprehensive income attributable to: (i) non-controlling interests, and (ii) shareholders of the parent.
If the entity presents the statement of profit or loss in a separate statement, it

1 The Brazilian corporate legislation in force at the date of issuance of this Pronouncement requires that the statement of profit or loss be presented in a separate statement.

will present item (a) in that statement.

Information to be presented in the statement of profit or loss and in the statement of comprehensive income
82. In addition to the items required in other pronouncements, the statement of profit or loss for the period must, at a minimum, include the following line items, also complying with legal determinations:
(a) revenues, presenting separately interest revenue calculated using the effective interest method; (aa) gains and losses arising from the derecognition of financial assets measured at amortized cost; (b) financing costs; (ba) impairment loss (including reversals of impairment losses or gains in impairment loss), determined in accordance with Section 5.5 of CPC 48; (c) share of results of invested companies, recognized through the equity method; (ca) if the financial asset is reclassified from the amortized cost measurement category so that it is measured at fair value through profit or loss, any gain or loss arising from the difference between the previous amortized cost of the financial asset and its fair value at the date of reclassification (as defined in CPC 48); (cb) if the financial asset is reclassified from the fair value through other comprehensive income measurement category so that it is measured at fair value through profit or loss, any accumulated gain or loss previously recognized in other comprehensive income that is reclassified to profit or loss; (d) taxes on profit; (e) (eliminated); (ea) a single value for the total of discontinued operations (see Technical Pronouncement CPC 31); (f) in compliance with Brazilian corporate legislation in force at the date of issuance of this Pronouncement, the statement of profit or loss must also include the following line items:
(i) cost of products, merchandise and services sold; (ii) gross profit; (iii) selling, general, administrative and other expenses and operating revenues; (iv) result before financial revenues and expenses; (v) result before taxes on profit; (vi) net profit for the period.
82A. Other comprehensive income must present line items for values of:
(a) other comprehensive income (excluding values provided for in item (b)), classified by nature and grouped into those that, in accordance with other pronouncements:
(i) will not be reclassified subsequently to profit or loss; and (ii) will be reclassified subsequently to profit or loss, when specific conditions are met; (b) share in other comprehensive income of affiliates and jointly controlled ventures accounted for by the equity method, separated by the share in the accounts that, in accordance with other pronouncements:

(i) will not be reclassified subsequently to profit or loss; and (ii) will be reclassified subsequently to profit or loss, when specific conditions are met.
83-84. (Eliminated).
85. Other accounts (by disaggregation of accounts listed in item 82), titles and subtotals must be presented in the statement of comprehensive income and in the statement of profit or loss for the period when such presentation is relevant for the understanding of the entity's performance.
85A. When the entity presents subtotals in accordance with item 85, these subtotals must:
(a) be composed of accounts composed of values recognized and measured in accordance with the CPC pronouncements; (b) be presented and named in such a way that the accounts that make up the subtotals are clear and understandable; (c) be consistent from period to period, in accordance with item 45; and (d) not be displayed with more prominence than the subtotals and totals required in the statements of profit or loss and other comprehensive income. 85B. The entity must present the accounts in the statements of profit or loss and other comprehensive income that reconcile any subtotals, presented in accordance with item 85, with the subtotals or totals required in the specific pronouncement.
86. Due to the effects of the entity's various activities, transactions and other events differing in terms of frequency, potential for gain or loss and predictability, the disclosure of the components of performance helps in understanding the performance achieved and in making projections of future results. Other line items must be included in the statement of comprehensive income and in the statement of profit or loss for the period, with the names used and the ordering of the line items modified when necessary to explain the elements of its performance. The factors to be considered include the relevance, nature and function of the components of the revenues and expenses of these statements. For example, a financial institution modifies the names referred to above in order to provide information that is relevant to the operations of a financial institution. Items of revenue and expense must not be offset unless the criteria of item 32 are met.
87. The entity must not present line items or items of revenue or expense as extraordinary items, whether in the statement of comprehensive income, in the statement of profit or loss for the period, or in the notes.

Net profit for the period
88. All items of revenue and expense recognized in the period must be included in the net profit for the period unless one or more Technical Pronouncements, Interpretations and Guidelines of the CPC require or allow a different procedure.
89. Some technical pronouncements, interpretations and guidelines of the CPC specify circumstances in which certain items may be excluded from the net profit for the period. CPC 23 deals

with two of these circumstances, namely: the correction of errors and the effect of changes in accounting policies. Other technical pronouncements, interpretations and guidelines of the CPC require or allow that other comprehensive income that falls within the definition of revenues and expenses of CPC 00 be excluded from net profit (see item 7).

Other comprehensive income for the period
90. The entity must disclose the amount of the tax effect relating to each component of other comprehensive income, including reclassification adjustments in the statement of comprehensive income or in the notes.
91. The components of other comprehensive income may be presented:
(a) net of their respective tax effects; or
(b) before their respective tax effects, with the total tax effect relating to these components presented as a single amount.
92. The entity must disclose reclassification adjustments relating to components of other comprehensive income.
93. Some pronouncements, interpretations and guidelines of the CPC specify whether and when items previously recorded as other comprehensive income should be reclassified to profit or loss for the period. These reclassifications are referred to in this pronouncement as reclassification adjustments. Such reclassification adjustments are included in the respective component of other comprehensive income in the period in which the adjustment is reclassified to net profit for the period. This gain may have been recognized as an unrealized gain in other comprehensive income of the current period or of previous periods. In this way, unrealized gains must be deducted from other comprehensive income in the period in which realized gains are recognized in net profit for the period, so that this same gain is not recognized twice.
94. Reclassification adjustments may be presented in the statement of comprehensive income or in the notes. The entity that presents the reclassification adjustments in the notes must present the components of other comprehensive income after the respective reclassification adjustments.
95. Reclassification adjustments are applicable, for example, in the disposal of investments in an entity abroad (see CPC 02 – Effects of Changes in Exchange Rates and Translation of Financial Statements) and when some transaction of a cash flow hedge affects the net profit for the period (see item 6.5.11(d) of CPC 48 regarding the accounting for cash flow hedges).
96. Reclassification adjustments do not arise from changes in the revaluation reserve (when permitted by current legislation), recognized in accordance with CPC 27 – Fixed Assets and CPC 04 – Intangible Assets, or from actuarial gains and losses of defined benefit plans, recognized in accordance with CPC 33 – Employee Benefits. These components must be recognized as other comprehensive income and must not be reclassified to net profit in subsequent periods. Changes in the revaluation reserve may be transferred

to retained earnings reserve (or accumulated losses), to the extent that the asset is used or when it is derecognized (see CPC 27 and CPC 04). According to CPC 48, no reclassification adjustments occur, if the cash flow hedge or the accounting for the time value of the option (or the forward element of the forward contract or spread based on foreign currency of a financial instrument) result in values that are withdrawn from the cash flow hedge reserve or from a separate component of equity, respectively, and included directly in the initial cost or in another accounting value of an asset or liability. These values must be transferred directly to assets or liabilities.

Information to be presented in the statement of profit or loss for the period or in the notes
97. When items of revenue and expense are material, their nature and amounts must be disclosed separately.
98. The circumstances that give rise to the separate disclosure of items of revenue and expense include:
(a) reductions in inventories to their net realizable value or in fixed assets to their recoverable amount, as well as the reversals of such reductions; (b) restructurings of the entity's activities and reversals of any provisions for restructuring costs; (c) disposals of items of fixed assets; (d) disposals of investments; (e) discontinued operating units; (f) settlement of litigation; and (g) other reversals of provisions.
99. The entity must present an analysis of expenses using a classification based on their nature, if legally permitted, or on their function within the entity, and must choose the criterion that provides reliable and most relevant information, complying with legal determinations.
100. (Eliminated).
101. Expenses must be sub-classified in order to highlight components of performance that may differ in terms of frequency, potential for gain or loss and predictability. This analysis must be provided in one of the two forms described below, complying with legal provisions.

The first form of analysis is the expense nature method. Expenses are aggregated in the statement of profit or loss according to their nature (for example, depreciation, purchases of materials, transport expenses, employee benefits and advertising expenses), not being reallocated among the various functions within the entity. This method can be simple to apply because no allocations of expenses to functional classifications are necessary. An example of a classification that uses the expense nature method is as follows:
Revenues X
Other Revenues X
Change in inventory of finished and work-in-progress products X Consumption of raw materials and materials X Employee benefits expense X Depreciation and amortization X Other expenses X Total expense (X) Result before taxes X
The second form of analysis is the expense function method or "cost of products and services sold", classifying expenses according to their function as part of the cost of products or services sold or, for example, distribution expenses or administrative activities. At a minimum, the entity must disclose the cost of products and services sold under this method separately from other expenses. This method may provide more relevant information to users than the classification of expenses by nature, but the allocation of expenses to functions may require arbitrary allocations and involve considerable judgment. An example of a classification that uses the expense function method is as follows:
Revenues X
Cost of products and services sold (X)
Gross profit X
Other revenues X
Selling expenses (X)
Administrative expenses (X)
Other expenses (X)
Result before taxes X
Entities that classify expenses by function must disclose additional information on the nature of expenses, including depreciation and amortization expenses and employee benefit expenses.
The choice between the expense function method and the expense nature method depends on historical and sectoral factors and on the nature of the entity. Both methods provide an indication of expenses that may vary, directly or indirectly, with the level of sales or production of the entity. Given that each presentation method has its merit according to the characteristics of different types of entity, this Technical Pronouncement establishes that it is up to management to choose the most relevant and reliable presentation method, meeting legal requirements. However, given that information on the nature of expenses is useful in predicting future cash flows, additional disclosure is required when the classification based on

COMMISSION OF SECURITIES AND EXCHANGE
Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/ SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Ed. Corporate Financial Center, S.404/4th Floor, Brasília/DF – ZIP: 70712-900 – Brazil -Tel.: (61) 3327-2030/2031 www.gov.br/cvm CVM RESOLUTION NO. 106, OF MAY 20, 2022 using the function of expenses method. In item 104, the expression "employee benefits" has the same meaning given in Technical Pronouncement CPC 33 – Employee Benefits.

Statement of changes in equity
Information to be presented in the statement of changes in equity
106. The entity must present the statement of changes in equity as required in item 10. The statement of changes in equity includes the following information:
(a) comprehensive income for the period, presenting separately the total amount attributable to the owners of the controlling entity and the amount corresponding to non-controlling interests; (b) for each component of equity, the effects of retrospective application or retrospective restatement, recognized in accordance with Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors; (c) (eliminated); (d) for each component of equity, the reconciliation of the balance at the beginning and at the end of the period, demonstrating separately (at minimum) the changes resulting from:
(i) net income;
(ii) each item of other comprehensive income; and (iii) transactions with owners acting in their capacity as owners, demonstrating separately their capital contributions and distributions made, as well as modifications in interests in controlled entities that did not imply loss of control.

Information to be presented in the statement of changes in equity or in the explanatory notes 106A. For each component of equity, the entity must present, either in the statement of changes in equity or in the explanatory notes, an analysis of other comprehensive income by item (see item 106 (d)(ii)). 106B. Equity must show share capital, capital reserves, revaluation reserves, profit reserves, treasury shares or quotas, accumulated losses, if accumulated profits are legally admitted, and other accounts required by Technical Pronouncements issued by CPC.
107. The entity must present, in the statement of changes in equity or in the explanatory notes, the amount of dividends recognized as distribution to owners during the period and the respective amount of dividends per share.
108. The components of equity referred to in item 106 include, for example, each class of paid-in capital, the accumulated balance of each class of comprehensive income, and the retained earnings reserve.
109. The changes in the entity's equity between two balance sheet dates must reflect the increase or decrease in its net assets during the period. With the exception of changes resulting from transactions with owners acting in their capacity as holders of equity instruments (such as capital contributions, reacquisitions of the entity's own equity instruments, and distribution of dividends) and transaction costs directly related to such transactions, the overall change in equity during a period represents the total net amount of revenues and expenses, including gains and losses, generated by the entity's activities during that period.

Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors requires retrospective adjustments when changes are made to accounting policies, to the extent that it is practicable, except when the transition provisions of another Technical Pronouncement, Guidance, or Interpretation of CPC require otherwise. Technical Pronouncement CPC 23 also requires that restatements to correct errors be made retrospectively, to the extent that it is practicable. Retrospective adjustments and retrospective restatements to correct errors are not changes in equity, but are adjustments to the opening balances of the retained earnings reserve (or accumulated losses) except when a Technical Pronouncement, Interpretation, or Guidance of CPC requires retrospective adjustments of another component of equity. Item 106(b) requires disclosure in the statement of changes in equity of the total adjustment for each component of equity resulting from changes in accounting policies and, separately, from error corrections. These adjustments must be disclosed for each prior period and at the beginning of the current period.

Statement of cash flows
111. Cash flow information provides users of financial statements with a basis to assess the entity's ability to generate cash and cash equivalents and the entity's needs to use those cash flows. Technical Pronouncement CPC 03 – Statement of Cash Flows defines the requirements for the presentation of the statement of cash flows and related disclosures.

Explanatory notes
Structure
112. Explanatory notes must:
(a) present information about the basis for the preparation of financial statements and the specific accounting policies used, in accordance with items 117 to 124; (b) disclose information required by Technical Pronouncements, Guidance, and Interpretations of CPC that has not been presented in the financial statements; and (c) provide additional information that has not been presented in the financial statements, but that is relevant for their understanding.
113. Explanatory notes must be presented, as far as practicable, in a systematic manner. In determining a systematic manner, the entity must consider the effects on the understandability and comparability of its financial statements. Each item of the financial statements must have a cross-reference to the respective information presented in the explanatory notes.

Examples of systematic ordering or grouping of explanatory notes include:
(a) highlighting areas of activity that the entity considers most relevant for the understanding of its financial performance and financial position, such as grouping information about certain operational activities; (b) grouping information about accounts measured in a similar manner, such as assets measured at fair value; or (c) following the order of accounts in the statement of income and other comprehensive income and the balance sheet, such as:
(i) declaration of compliance with Technical Pronouncements, Guidance, and Interpretations of CPC (see item 16); (ii) significant accounting policies applied (see item 117); (iii) supporting information of items presented in the financial statements in the order in which each statement and each line item are presented; and (iv) other disclosures, including:
(1) contingent liabilities (see Technical Pronouncement CPC 25) and unrecognized contractual commitments; and (2) non-financial disclosures, for example, the entity's financial risk management objectives and policies (see Technical Pronouncement CPC 40).
(Eliminated).
Explanatory notes that provide information about the basis for the preparation of financial statements and specific accounting policies can be presented as a separate section of the financial statements.

Disclosure of accounting policies
117. The entity must disclose its significant accounting policies which comprise:
(a) the base (or bases) of measurement used in the preparation of the financial statements; and (b) other accounting policies used that are relevant to the understanding of the financial statements.
118. It is important that users are informed about the base or bases of measurement used in the financial statements (for example, historical cost, current cost, net realizable value, fair value, or recoverable amount) because the basis on which the financial statements are prepared significantly affects the users' analysis. When more than one measurement base is used in the financial statements, for example, when certain classes of assets are revalued (if legally permitted), it is sufficient to disclose an indication of the categories of assets and liabilities to which each measurement base was applied.
119. When deciding whether a particular accounting policy should or should not be disclosed, management must consider whether its disclosure will provide users with a better understanding of how transactions, other events, and conditions are reflected in the reported performance and financial position. Each entity must consider the nature of its operations and the policies that users of its financial statements expect to be disclosed for this type of entity. The disclosure of certain accounting policies is especially useful for users when these policies are selected among alternatives permitted in Technical Pronouncements, Interpretations, and Technical Guidance issued by CPC. An example is the disclosure of whether the entity applies fair value or the cost model for its investment property (see Technical Pronouncement CPC 28 – Investment Property). Some Technical Pronouncements, Guidance, or Technical Interpretations issued by CPC specifically require the disclosure of certain accounting policies, including choices made by management among different permitted policies. For example, Technical Pronouncement CPC 27 – Property, Plant and Equipment requires the disclosure of the measurement bases used for classes of property, plant, and equipment.
120. (Eliminated).
121. An accounting policy may be significant due to the nature of the entity's operations, even if the amounts associated with prior and current periods are not material. It is also appropriate to disclose each significant accounting policy that is not specifically required by Technical Pronouncements, Guidance, and Interpretations of CPC, but that has been selected and applied in accordance with Technical Pronouncement CPC 23 – Accounting Policies, Changes in Accounting Estimates and Errors.
122. The entity must disclose, together with its significant accounting policies or in other explanatory notes, the judgments made, with the exception of those involving estimates (see item 125), that management made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognized in the financial statements.
123. In the process of applying the entity's accounting policies, management exercises various judgments, in addition to those involving estimates, which may significantly affect the amounts recognized in the financial statements. For example, management exercises judgment when defining:
(a) (eliminated);
(b) when substantially all significant risks and benefits of ownership of financial assets and, for lessors, assets subject to lease are transferred to other entities; (c) whether, in substance, certain sales of goods arise from financing agreements and, therefore, do not give rise to sales revenue; and (d) whether the contractual terms of a financial asset give rise, at specified dates, to cash flows that constitute solely payments of principal and interest on the principal amount outstanding.
124. Some disclosures made in accordance with item 122 are required by other Technical Pronouncements, Guidance, and Technical Interpretations issued by CPC. For example, Technical Pronouncement CPC 45 – Disclosure of Interests in Other Entities requires the entity to disclose the judgments that were made in determining whether the entity controls another entity. Technical Pronouncement CPC 28 – Investment Property requires the disclosure of the criteria used by the entity to distinguish investment property from owner-occupied property and property held for sale in the ordinary course of business, in situations where the classification of properties is difficult.

Sources of uncertainty in estimation
125. The entity must disclose, in the explanatory notes, information about assumptions regarding the future and other main sources of uncertainty in estimates at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities over the next financial year. With respect to these assets and liabilities, the explanatory notes must include elucidating details about:
(a) their nature; and
(b) their carrying amount at the end of the reporting period.
126. Defining the amounts of some assets and liabilities requires estimating the effects of uncertain future events on these assets and liabilities at the end of the reporting period. For example, in the absence of recently observed market prices, forward-looking estimates become necessary to measure the recoverable amount of property, plant, and equipment assets, the effect of technological obsolescence on inventories, provisions subject to the future outcome of ongoing litigation, and long-term employee benefit liabilities, such as pension obligations. These estimates involve assumptions about these subjects, such as the risk associated with cash flows or discount rates, future changes in wages, and future changes in prices that affect other costs.
127. The assumptions and other main sources of estimation uncertainty disclosed in accordance with item 125 relate to estimates whose judgments are the most difficult to be made by management, subjective, or even complex. As the number of variables and assumptions affecting the possible future resolution of uncertainties increases, these judgments become more subjective and complex, increasing, consequently, the probability of material adjustment to the carrying amounts of assets and liabilities.
128. The disclosures described in item 125 are not required for assets and liabilities that have a significant risk that their carrying amounts may undergo significant change over the next financial year if, at the end of the financial statement period, they are measured at fair value based on a quoted price in an active market for an identical asset or liability. In this case, fair values may change materially over the next financial year, but these changes will not be the result of assumptions or other sources of estimation uncertainty at the end of the financial statement period.
129. The disclosures described in item 125 must be presented in a way to help users of the financial statements understand the judgments that management made regarding the future and about other main sources of estimation uncertainty. The nature and extent of the information to be disclosed vary according to the nature of the assumptions and other circumstances. Examples of these types of disclosures are as follows:
(a) the nature of the assumptions or other uncertainties in estimates; (b) the sensitivity of the carrying amounts to the methods, assumptions, and estimates underlying their calculation, including the reasons for this sensitivity; (c) the expected resolution of uncertainty and the variety of reasonably possible outcomes over the next financial year regarding the carrying values of affected assets and liabilities; and (d) an explanation of changes made to assumptions adopted in the past regarding these assets and liabilities, if the uncertainty remains unresolved.
130. This Pronouncement does not require the disclosure of projections or budgets when making the disclosures described in item 125.
131. Sometimes, it is impracticable to disclose the extent of the possible effects of an assumption or another main source of estimation uncertainty at the end of the reporting period. In these circumstances, the entity must disclose that it is reasonably possible, based on existing knowledge, that the values of the respective assets or liabilities over the next financial year will have to undergo material adjustments due to the observation of a reality distinct from those assumed assumptions. In all cases, the entity must disclose the nature and carrying value of the specific asset or liability (or class of assets or liabilities) affected by these assumptions.
132. The disclosures described in item 122 regarding specific judgments made by management in the process of applying the entity's accounting policies do not relate to the disclosures of the main sources of estimation uncertainty described in item 125.
133. The disclosure of some of the assumptions of item 125 is required by other Technical Pronouncements, Interpretations, or Technical Guidance issued by CPC. For example, Technical Pronouncement CPC 25 – Provisions, Contingent Liabilities and Contingent Assets requires the disclosure, in specific circumstances, of important assumptions regarding future events that affect certain provisions. Technical Pronouncement CPC 46 – Fair Value Measurement requires the disclosure of significant assumptions (including valuation techniques and information) that the entity applies in measuring the fair value of assets and liabilities that are measured at fair value.

Capital
134. The entity must disclose information that allows users of the financial statements to assess its capital management objectives, policies, and processes.
135. In order to comply with the provisions of item 134, the entity must disclose the following information:
(a) qualitative information about its capital management objectives, policies, and processes, including, but not limited to, the following:
(i) description of the elements included in capital management; (ii) if the entity is subject to externally imposed capital requirements, the nature of these requirements and how they are integrated into capital management; and (iii) how it is meeting its capital management objectives. (b) synthetic quantitative data about the elements included in capital management. Some entities consider some financial liabilities (such as, for example, some forms of subordinated loans) as part of capital, while others consider that some components of equity should be excluded from capital (such as, for example, components associated with cash flow hedge transactions); (c) any changes in the elements referred to in items (a) and (b) compared to the preceding period;

SECURITY AND EXCHANGE COMMISSION OF BRAZIL (CVM) Rua Sete de Setembro, 111/2-5th and 23-34th Floors, Center, Rio de Janeiro/RJ – ZIP: 20050-901 – Brazil - Tel.: (21) 3554-8686 Rua Cincinato Braga, 340/2nd, 3rd and 4th Floors, Bela Vista, São Paulo/SP – ZIP: 01333-010 – Brazil - Tel.: (11) 2146-2000 SCN Q.02 – Bl. A – Corporate Financial Center Building, S.404/4th Floor, Brasília/DF – ZIP: 70712-900 – Brazil - Tel.: (61) 3327-2030/2031 www.gov.br/cvm

CVM RESOLUTION NO. 106, OF MAY 20, 2022

(d) indication of compliance or non-compliance, during the period, with any external capital requirements to which the entity is or was subject; (e) if the entity has not met these external capital requirements, the consequences of such non-compliance.

These disclosures must be based on information provided internally to the entity’s key management personnel.

An entity may manage its capital in a variety of ways and may be subject to different requirements with respect to its capital. For example, a conglomerate may include entities that conduct insurance activities, alongside others that conduct banking activities, and these entities may operate in several different countries. If aggregated disclosure of capital requirements and how capital is managed does not provide adequate information or contributes to distorting users’ understanding of the entity’s capital resources, the entity must disclose separate information regarding each capital requirement to which it is subject.

Financial instruments with a put option classified in equity

136A. In the case of puttable financial instruments classified as equity instruments, the entity must disclose (to the extent not disclosed elsewhere in the financial statements):
(a) quantitative summary data about amounts classified in equity; (b) its objectives, policies, and processes for managing its obligation to repurchase or redeem instruments when required to do so by the holders of those instruments, including any changes from the previous period; (c) the expected cash outflow on the repurchase or redemption of that class of financial instruments; and (d) information about how that expected cash outflow on the repurchase or redemption of that class of financial instruments was determined.

Other disclosures

The entity must disclose in the notes to the financial statements:
(a) the amount of dividends proposed or declared before the date when the financial statements were authorized for issue and not recognized as a distribution to owners during the period covered by the financial statements, as well as the related amount per share or equivalent; (b) the amount of any cumulative preferred dividends not recognized.
The entity must disclose, if not disclosed elsewhere in the information published with the financial statements, the following information:
(a) the entity’s domicile and legal form, its country of registration, and the address of its registered office (or the location of its principal place of business, if different from the registered office); (b) a description of the nature of the entity’s operations and its principal activities; and (c) the name of the parent entity and the ultimate controlling entity of the group. (d) if an entity is established for a fixed term, information regarding the term of duration.

139-139L. (Eliminated).

This Technical Pronouncement replaces CPC 26 – Presentation of Financial Statements, approved on July 17, 2009, revised by CPC Revision No. 1, approved on January 8, 2010.

Appendix A – Example

Example of a Statement of Changes in Equity with disclosure of other comprehensive income and the Statement of Comprehensive Income (The Appendix accompanies, but is not part of, the Technical Pronouncement)

The following example is illustrative of how the Statement of Comprehensive Income for the period, introduced by this Technical Pronouncement, could be presented, using the Statement of Changes in Equity that is already commonly prepared in Brazil. The following example did not intend to regulate the format of presentation of the Statement of Changes in Equity.

Note that the column for Non-Controlling Interests in the Equity of Controlled Entities has been added, since this participation (also known as Minority or Non-Controlling Interest) will, from the adoption of this Pronouncement, be presented within Equity as a whole, after the identification of the Equity of the Controlling Entity’s Owners.

It should also be noted that, according to the definition given at the beginning of the Pronouncement:

Comprehensive income is the change in equity during a period that results from transactions and other events that are not derived from transactions with owners in their capacity as owners.

That is, all equity changes, other than capital transactions with owners, comprise the Statement of Comprehensive Income; that is, the change in equity is formed by only two sets of values: capital transactions with owners (in their capacity as owners) and total comprehensive income. And total comprehensive income is, in turn, formed by three components: net income for the period, other comprehensive income, and the effect of reclassifications of other comprehensive income to profit or loss. See how this is disclosed in the example.

Finally, the Pronouncement requires that both net income for the period and other comprehensive income be disclosed regarding how much belongs to the owners of the controlling entity and how much belongs to non-controlling owners in controlled entities. In the following example, these values are automatically disclosed.

Note: Remember that the presentation of the Statement of Comprehensive Income solely within the Statement of Changes in Equity is now prohibited.

Example:

	Share Capital Paid-in	Capital Reserves, Granted Options and Treasury Shares (1)	Profit Reserves (2)	Accumulated Profits or Losses	Other Comprehensive Income (3)	Equity of Controlling Entity Owners	Non-Controlling Interests in Equity of Controlled Entities	Consolidated Equity
Initial Balances	1,000,000	80,000	300,000	0	270,000	1,650,000	158,000	1,808,000
Capital Increase	500,000	-50,000	-100,000		350,000	32,000	382,000
Share Issuance Costs		-7,000
Recognized Granted Options		30,000
Treasury Shares Acquired		-20,000
Treasury Shares Sold		60,000
Dividends				-162,000		-162,000	-13,200	-175,200
Capital Transactions with Owners	251,000					18,800	269,800
Net Income for the Period				250,000		250,000	22,000	272,000
Financial Instruments Adjustments					-60,000
Taxes on Financial Instruments Adjustments					20,000
Equity Method: Other Comp. Income of Affiliates					24,000	24,000	6,000	30,000
Period Conversion Adjustments					260,000
Taxes on Period Conversion Adjustments					-90,000
Other Comprehensive Income					154,000	6,000	160,000
Reclass. to Profit – Fin. Inst. Adj.					10,600
Total Comprehensive Income					414,600	28,000	442,600
Reserve Formation			140,000	-140,000
Realization of Revaluation Reserve			78,800	-78,800
Taxes on Realization of Revaluation Reserve			-26,800	26,800
Final Balances	1,500,000	93,000	340,000	0	382,600	2,315,600	204,800	2,520,400

Observations:

a) Consolidated equity (last column) evolved from $1,808,000 to $2,520,400 due to only two sets of factors: capital transactions with owners ($269,800) and comprehensive income ($442,600). And comprehensive income is formed of three components: net income for the period ($272,000), other comprehensive income ($160,000), and plus the reclassification effect ($10,600). It is interesting to note that reclassifications to the period’s profit do not actually change the entity’s total equity, but, because they increase or decrease net income, they must have a corresponding disclosure. In the given example, there is a transfer of $10,600 of loss that was recorded as other comprehensive income to the period’s profit. Immediately before the transfer, net income was $260,600, which, decreased by the $10,600 loss now recognized in profit, became $250,000; and the balance of other comprehensive income, which was $404,000, became $414,600. Thus, the transfer of the $10,600 loss from other comprehensive income to the period’s profit does not effectively change the total equity, but since net income is shown by the amount decreased by this value, it is necessary to put it back into the change in equity.

b) In the statement of the period’s profit, the last line will be shown as $272,000, because, from this Technical Pronouncement CPC 26 – Presentation of Financial Statements, the consolidated net profit for the period is the global amount, including the portion belonging to non-controlling interests in the results of controlled entities, but it is mandatory to disclose both values: the portion belonging to the controlling entity’s owners and the portion belonging to those who are owners only in controlled entities, as seen in the change above ($250,000 and $22,000, respectively in the third-to-last and second-to-last columns).

c) The Pronouncement requires the same disclosure regarding total comprehensive income, which is also evidenced in the example above: $414,600 is the portion for the controlling entity’s owners and $28,000 the portion for non-controlling owners in controlled entities, totaling $442,600 for the period.

d) The changes that appear after total comprehensive income correspond to internal changes in equity, which do not effectively change its total. This set could even be titled “internal changes in equity” or similar, or remain untitled as it is in the example itself.

e) The balances of the accounts comprising the second, third, and fifth columns must be disclosed in a separate table or in an additional note; in the case of a note, it can be disclosed as follows:

“(1) Final balances (initial): Excess Capital Reserve, $80,000; Share Issuance Costs, ($7,000); Investment Subsidy Reserve, $10,000; Treasury Shares, ($50,000) and Recognized Granted Options, $60,000. Total, $93,000.
(2) Final balances: Legal Reserve, $88,000; Tax Incentives Reserve, $52,000 and Profit Retention Reserve (art. 196 of Law 6.404/76), $200,000. Total, $340,000.
(3) Final balances: Revaluation Reserves, $234,600; Asset Valuation Adjustments, $68,000 and Accumulated Conversion Adjustments, ($80,000). Total, $382,600.”

f) The balances referred to in letter d) may, alternatively, be disclosed in tables, with their changes analytically evidenced:

Capital Reserves, Granted Options and Treasury Shares (1)

	Excess Capital Reserve	Share Issuance Costs	Investment Subsidy Reserve	Treasury Shares	Recognized Granted Options	Group Accounts (1)
Initial Balances	50,000	-5,000	100,000	-70,000	5,000	80,000
Capital Increase	-35,000			-15,000		-50,000
Share Issuance Costs		-7,000				-7,000
Recognized Granted Options					30,000	30,000
Treasury Shares Acquired				-20,000		-20,000
Treasury Shares Sold				60,000		60,000
Final Balances	15,000	-12,000	85,000	-30,000	35,000	93,000

Profit Reserves (2)

	Legal Reserve	Expansion Reserve	Tax Incentives Reserve	Group Accounts (2)
Initial Balances	110,000	90,000	100,000	300,000
Capital Increase		-100,000		-100,000
Reserve Formation	12,500	108,500	19,000	140,000
Final Balances	122,500	198,500	19,000	340,000

Other Comprehensive Income (3)

	Revaluation Reserves	Asset Valuation Adjustments	Accumulated Conversion Adjustments	Group Accounts (3)
Initial Balances	195,000	125,000	-50,000	270,000
Financial Instruments Adjustments	-60,000			-60,000
Taxes on Financial Instruments Adjustments	20,000			20,000
Equity Method: Other Comp. Income of Affiliates	24,000			24,000
Period Conversion Adjustments	260,000			260,000
Taxes on Period Conversion Adjustments	-90,000			-90,000
Reclass. to Profit – Fin. Inst. Adj.	10,600			10,600
Realization of Revaluation Reserve	-78,800			-78,800
Taxes on Realization of Revaluation Reserve	26,800			26,800
Final Balances	143,000	119,600	120,000	382,600

g) The example above is brief and does not contain, only for simplicity, many of the other mandatory information in the Statement of Changes in Equity, such as dividends per class and type of share, comparative information, etc.

CVM Resolution No. 106 of May 20, 2022

Lineage: In force