CVM Resolution No. 108 of May 20, 2022

SECURITIES 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 – 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. 108, OF MAY 20, 2022
Approves the Consolidation of Technical Pronouncement CPC 31 of the Accounting Pronouncements Committee - CPC, which deals with non-current asset held for sale and discontinued operation.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL - 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 makes mandatory for open-capital companies the Technical Pronouncement CPC 31, which deals with non-current asset held for sale and discontinued operation, issued by the Accounting Pronouncements Committee - CPC, as consolidated in Annex “A” to this Resolution.

Art. 2. Deliberation 598, of September 15, 2009, 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

CVM RESOLUTION NO. 108, OF MAY 20, 2022
ANNEX “A”
ACCOUNTING PRONOUNCEMENTS COMMITTEE
TECHNICAL PRONOUNCEMENT CPC 31
NON-CURRENT ASSET HELD FOR SALE AND DISCONTINUED OPERATION Correlation to International Financial Reporting Standards – IFRS 5

Summary Item
OBJECTIVE 1
SCOPE 2 – 5B
CLASSIFICATION OF NON-CURRENT ASSET AS HELD FOR SALE 6 – 14 Non-current asset to be disposed of 13 – 14 MEASUREMENT OF NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE 15 – 29 Measurement of non-current asset held for sale 15 – 19 Recognition of impairment loss and reversal 20 – 25 Change in sale plan 26 – 29 PRESENTATION AND DISCLOSURE 30 – 42 Presentation of discontinued operation 31 – 36A Gain or loss related to continuing operation 37 Presentation of non-current asset classified as held for sale 38 – 40 Additional disclosures 41 – 42 TRANSITIONAL PROVISION 43
APPENDIX A – Definition of terms
APPENDIX B – Application supplement
APPENDIX C – Implementation guide

CVM RESOLUTION NO. 108, OF MAY 20, 2022
Objective

The objective of this Technical Pronouncement is to establish the accounting for non-current assets held for sale (classified as held for sale) and the presentation and disclosure of discontinued operations. In particular, the Pronouncement requires that assets that meet the criteria for classification as held for sale be:
(a) measured at the lower of their carrying amount and fair value less costs to sell, and that depreciation or amortization of these assets cease; (b) presented separately in the balance sheet and that the results of discontinued operations be presented separately in the income statement.

Scope
2. The classification and presentation requirements of this Technical Pronouncement apply to all recognized non-current assets and to all groups of assets held for sale of the entity. The measurement requirements of this Pronouncement apply to all recognized non-current assets and to groups of assets held for sale (as defined in paragraph 4), with the exception of the assets listed in paragraph 5, which must continue to be measured in accordance with the specific applicable pronouncements.

Assets classified as non-current, in accordance with Technical Pronouncement CPC 26 - Presentation of Financial Statements, shall not be reclassified as current assets until they meet the criteria for classification as held for sale in accordance with this Pronouncement. Assets of a class that the entity would normally consider as non-current, and that are acquired for resale, shall not be classified as current, unless they meet the criteria for classification as held for sale in accordance with this Technical Pronouncement.
Sometimes, the entity puts a group of assets, possibly with some directly associated liabilities, up for sale together in a single transaction. A group of assets held for sale may be a group of cash-generating units, a single cash-generating unit or part of a cash-generating unit. () The group of assets may include any assets and any liabilities of the entity, including current assets, current liabilities and assets excluded by paragraph 5 from the measurement requirements of this Pronouncement. If a non-current asset within the scope of the measurement requirements of this Pronouncement is part of the group of assets held for sale, the measurement requirements of this Pronouncement apply to the group of assets as a whole, so that the group of assets is measured at the lower of its carrying amount and fair value less costs to sell. The requirements for measurement of individual assets and liabilities within the group of assets held for sale are defined in paragraphs 18, 19 and 23.
() However, since the cash flows of the asset or group of assets are expected to result mainly from sale and not from continuing use, they become less dependent on cash flows resulting from other assets, and the group of assets held for sale that was part of the cash-generating unit becomes an individual cash-generating unit.

CVM RESOLUTION NO. 108, OF MAY 20, 2022
5. The measurement rules of this pronouncement () do not apply to the assets listed below, which are covered by the indicated pronouncements, either as individual assets or as part of a group of assets held for sale:
(a) deferred tax assets (CPC 32 – Income Taxes); (b) assets arising from employee benefits (CPC 33 – Employee Benefits); (c) financial assets within the scope of CPC 48 – Financial Instruments; (d) non-current assets that are accounted for at fair value in accordance with CPC 28 – Investment Property; (e) non-current assets that are measured at fair value less estimated costs to sell, in accordance with Technical Pronouncement CPC 29 – Biological Assets and Agricultural Produce; (f) contractual rights under insurance contracts as defined in CPC 11 – Insurance Contracts. () The provisions in paragraphs 18 and 19 apply to these, which require that the assets in question be measured in accordance with other applicable pronouncements.

5A. The classification, presentation and measurement required by this Technical Pronouncement applicable to non-current asset (or group of assets) classified as held for sale also apply to non-current asset (or group of assets) that is classified as held for distribution to owners in their capacity as owners (held for distribution to owners).

5B. This Pronouncement specifies the disclosures required on non-current assets (or groups of assets) classified as held for sale or discontinued operations. Disclosures required by other Technical Pronouncements do not apply to these assets (or groups of assets) unless those Pronouncements require:
(a) specific disclosure regarding non-current assets (or groups of assets) classified as held for sale or discontinued operations; or (b) disclosure on measurement of assets and liabilities of group of assets held for sale that are not within the scope of the measurement requirements of this Technical Pronouncement and that these disclosures are not already available in other notes to the financial statements. Additional disclosures on non-current assets (or groups of assets) classified as held for sale or discontinued operations may be necessary to meet the general requirements of Technical Pronouncement CPC 26 – Presentation of Financial Statements, particularly its paragraphs 15 and 125.

Classification of non-current asset as held for sale
6. The entity shall classify a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

For this to be the case, the asset or group of assets held for sale must be available for immediate sale in its present condition, subject only to terms that are usual and customary for sales of such assets held for sale. Accordingly, its sale must be highly probable.
For the sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset, and a program to locate a buyer and complete the plan must have been initiated. In addition, the asset held for sale must be actively marketed for sale at a price that is reasonable in relation to its current fair value. It should be expected that the sale will be qualified as completed within one year from the date of classification, except as permitted by paragraph 9, and the actions required to complete the plan must indicate that it is unlikely that there will be significant changes to the plan or that the plan will be withdrawn.

8A. The entity that is committed to a plan to sell a subsidiary shall classify all assets and liabilities of that subsidiary (in the consolidated balance sheet) as held for sale when the criteria established in paragraphs 6 to 8 are present, regardless of whether the entity will hold a non-controlling interest in the investee after the sale of that subsidiary.

Events or circumstances may extend the period required to complete the sale to beyond one year. The extension of the period during which it is required that the sale be completed does not prevent the asset from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to sell the asset. This is the case when the criteria in Appendix B are met.
Sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance in accordance with Technical Pronouncement CPC 27 – Property, Plant and Equipment.
When the entity acquires a non-current asset or a group of assets exclusively with a view to its subsequent disposal (including in the case of an asset received in exchange for another, such as in payment in kind), it shall classify it as held for sale only on the date of acquisition if the one-year requirement in paragraph 8 is met (except as permitted by paragraph 9) and if it is highly probable that any other criterion of paragraphs 7 and 8, which is not met on that date, will be met in the short term after the acquisition (normally, within three months).
If the criteria of paragraphs 7 and 8 are met after the balance sheet date, the entity shall not classify the non-current asset or group of assets held for sale as such in those financial statements when they are disclosed. However, when these criteria are met after the balance sheet date, but before the authorization for issuance of the financial statements, the entity shall

CVM RESOLUTION NO. 108, OF MAY 20, 2022 disclose specific information in the notes to the financial statements, as provided in paragraphs 41(a), (b) and (d).

12A. The non-current asset (or group of assets) is classified as held for distribution to owners when the entity is committed to distribute this asset (or group of assets) to the owners. For this to be necessary that the assets be available for immediate distribution in their current condition and that the distribution be highly probable. For this distribution to be highly probable, actions to complete the distribution must already have been initiated and there must be an expectation that they will be completed within one year from classification. Actions required to complete the distribution must indicate that it is not likely that significant changes to the distribution will be made or that the distribution will not be made. The likelihood of shareholder approval (if required by law or bylaws) must be considered as a factor in verifying whether the distribution is classifiable as highly probable.

Non-current asset to be disposed of
13. The entity shall not classify as held for sale the non-current asset or group of assets intended to be disposed of. This is because its carrying amount will be recovered principally through continuing use. However, if the group of assets classified as held for sale that will be disposed of meets the criteria of paragraphs 32(a) to (c), the entity shall present the results and cash flows of the asset held for sale as discontinued operations, in accordance with paragraphs 33 and 34, on the date on which it ceases to be used. Non-current assets to be disposed of include assets that must be used until the end of their economic life and non-current assets that must be closed rather than sold.

The entity shall not account for the non-current asset that has been temporarily taken out of service as if it had been disposed of.

Measurement of non-current asset classified as held for sale Measurement of non-current asset held for sale
15. The entity shall measure the asset or group of non-current assets classified as held for sale at the lower of its carrying amount and fair value less costs to sell.

15A. The entity shall measure the non-current asset (or group of assets) held for distribution to owners at the lower of its carrying amount and its fair value less distribution costs().
() Distribution costs are the incremental costs directly attributable to the distribution, excluding finance costs and income taxes.

If the newly acquired asset or group of assets meets the criteria for classification as held for sale (see paragraph 11), the application of paragraph 15 will result in the asset or group of assets being measured at initial recognition at the lower of what would be its carrying amount, had it not been so classified (for example, cost), and fair value less costs to sell. If the asset or group of assets is acquired as part of a business combination, it shall be measured at fair value less costs to sell.
When the sale is expected to occur after one year, the entity shall measure the costs to sell at present value. Any increase in the present value of the costs to sell that results from the passage of time shall be presented in the results as a finance cost, applying the provisions of Technical Pronouncement CPC 12 – Present Value Adjustment, as applicable.
Immediately before the initial classification of the asset or group of assets as held for sale, the carrying amounts of the asset (or of all assets and liabilities of the group of assets) shall be measured in accordance with the applicable Technical Pronouncements.
In subsequent measurement of a group of assets held for sale, the carrying amounts of any assets and liabilities that are not within the scope of the measurement requirements of this Technical Pronouncement, but that are included in a group of assets classified as held for sale, shall be remeasured in accordance with the applicable Technical Pronouncements before the fair value less costs to sell of the group of assets held for sale is remeasured.

Recognition of impairment loss and reversal
20. The entity shall recognize, in accordance with Technical Pronouncement CPC 01 – Impairment of Assets, an impairment loss for any initial or subsequent reduction of the asset or group of asset held for sale to fair value less costs to sell, in addition to any other loss that has been recognized in accordance with paragraph 19.

The entity shall recognize a gain for any subsequent increase in fair value less costs to sell of an asset, limited to the cumulative impairment loss that has been recognized, either in accordance with this Pronouncement or previously, in accordance with Technical Pronouncement CPC 01 - Impairment of Assets.
The entity shall recognize a gain for any subsequent increase in fair value less costs to sell of a group of assets held for sale:
(a) to the extent that it has not been recognized in accordance with paragraph 19; but (b) not beyond the cumulative impairment loss that has been recognized, either in accordance with this Technical Pronouncement or previously in accordance with Technical Pronouncement CPC 01 - Impairment of Assets, in the non-current assets that are within the scope of the measurement requirements of this Pronouncement.
The impairment loss (or any subsequent gain) recognized for a group of assets held for sale shall reduce (or increase) the carrying amount of the non-current assets of the group of assets that is within the scope of the measurement requirements of this Technical Pronouncement in the order of allocation defined in paragraphs 99(a) and (b) and 117 of Technical Pronouncement CPC 01 - Impairment of Assets.

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 108, DE 20 DE MAIO DE 2022

The gain or loss that has not been recognized previously at the date of sale of a non-current asset or a group of assets held for sale must be recognized at the date of derecognition. The requirements related to derecognition are defined:
(a) in items 67 to 72 of Technical Pronouncement CPC 27 - Property, Plant and Equipment; and (b) in items 112 to 117 of Technical Pronouncement CPC 04 - Intangible Assets, related to intangible assets.
The entity must not depreciate (or amortize) the non-current asset while it is classified as held for sale or while it is part of a group of assets classified as held for sale. Interest and other expenses attributable to liabilities of a group of assets classified as held for sale must continue to be recognized.

Alteration in a sale plan or in a distribution plan to owners

If the entity has classified an asset as held for sale or as held for distribution to owners, but the criteria of items 7 to 9 (for held for sale) or item 12A (for held for distribution to owners) are no longer met, the entity must cease to classify the asset (or group of assets) as held for sale or as held for distribution to owners (respectively). In these cases, the entity must follow the guidance of items 27 to 29 to account for this change, except when item 26A applies.

26A. If the entity reclassifies an asset (or group of assets) directly from held for sale to held for distribution to owners, or directly from held for distribution to owners to held for sale, then the change in classification must be considered as a continuation of the original disposal plan. The entity:
(a) must not follow the guidance of items 27 to 29 to account for this change. The entity must apply the classification, presentation and measurement requirements of this pronouncement applicable to the new disposal method; (b) must measure the non-current asset (or group of assets), following the requirements of item 15 (if reclassified as held for sale) or 15A (if reclassified as held for distribution to owners) and must recognize any decrease or increase in the fair value less costs to sell or distribute the non-current asset (or group of assets), following the requirements of items 20 to 25; (c) must not change the classification date, according to items 8 and 12A. This does not prevent the extension of the period necessary to complete the sale or distribution to owners, if the conditions of item 9 are met.

The entity must measure the non-current asset (or group of assets) that ceases to be classified as held for sale or as held for distribution to owners (or ceases to be included in a group of assets classified as held for sale or as held for distribution to owners) at the lower of:
(a) its carrying amount before the asset or group of assets was classified as held for sale (or as held for distribution to owners), adjusted by any depreciation, amortization or revaluation (if legally permitted) that would have been recognized if the asset or group of assets had not been classified as held for sale (or as held for distribution to owners); and (b) its recoverable amount at the date of the subsequent decision not to sell or distribute to owners. (*)

(*) If the non-current asset is part of a cash-generating unit, its recoverable amount is the carrying amount that would have been recognized after the allocation of any impairment loss resulting from that cash-generating unit according to Technical Pronouncement CPC 01 - Impairment of Assets.

The entity must include in profit or loss any adjustment required in the carrying amount of non-current asset that ceases to be classified as held for sale or as held for distribution to owners (*) of continuing operations in the period in which the criteria of items 7 to 9 or 12A, respectively, are no longer met. Financial statements relating to periods since the classification as held for sale or as held for distribution to owners must be restated if the non-current asset that ceases to be classified as held for sale or as held for distribution to owners is a subsidiary, joint operation, jointly controlled entity, associate, or interest in a jointly controlled entity or associate. The entity must present this adjustment in the same line of the statement of profit or loss used to present the gain or loss, if any, recognized according to item 37.

(*) Unless the asset is a property or an intangible asset that has been revalued (if legally permitted) according to Technical Pronouncement CPC 04 or CPC 27 before the classification as held for sale, when the adjustment must be treated as an increase or decrease in revaluation.

If the entity removes an individual asset or an individual liability from a group of assets classified as held for sale, the remaining assets and liabilities of the group of assets to be sold must continue to be measured as a group of assets only if the group meets the criteria of items 7 to 9. If the entity removes an individual asset or an individual liability from a group of assets classified as held for distribution to owners, the remaining assets and liabilities of the group of assets to be distributed must continue to be measured as a group only if the group meets the criteria of item 12A. Otherwise, the remaining non-current assets of the group of assets that individually meet the classification criteria as held for sale (or as held for distribution to owners) must be measured individually at the lower of their carrying amounts and their fair values less costs to sell (or distribute) at that date. Any non-current assets that do not meet the criteria to be held for sale must cease to be classified as held for sale, according to item 26. The non-current assets that do not meet the criteria to be held for distribution to owners must cease to be classified as held for distribution to owners, according to item 26.

Presentation and disclosure

The entity must present and disclose information that allows users of the financial statements to assess the financial effects of discontinued operations and of non-current assets held for sale.

Presentation of discontinued operation

A component of the entity comprises operations and cash flows that can be clearly distinguished, operationally and for disclosure purposes in the financial statements, from the rest of the entity. In other words, a component of the entity will have been a cash-generating unit or a group of cash-generating units while held for use.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and
(a) represents a major line of separate business or geographical area of operations; (b) is an integral part of a single coordinated plan to sell a major line of separate business or geographical area of operations; or (c) is a subsidiary acquired exclusively with the objective of resale.
The entity must disclose:
(a) a single amount in the statement of profit or loss comprising:
(i) the total result after income tax of discontinued operations; and (ii) the gains or losses after income tax recognized in measurement at fair value less costs to sell or in derecognition of assets or group of assets(s) held for sale that constitute the discontinued operation. (b) analysis of the single amount referred to in item (a) with:
(i) revenues, expenses and result before taxes of discontinued operations; (ii) expenses with taxes on profit related as required by item 81(h) of Technical Pronouncement CPC 32 - Income Taxes; (iii) gains or losses recognized in measurement at fair value less costs to sell or in disposal of assets or group of assets held for sale that constitute the discontinued operation; and (iv) income tax expenses related as required by item 81(h) of Technical Pronouncement CPC 32. The analysis may be presented in the explanatory notes or in the statement of profit or loss. If it is in the statement of profit or loss, it must be presented in an identified section and that is related to discontinued operations, that is, separately from continuing operations. The analysis is not required for groups of assets held for sale that are newly acquired subsidiaries that meet the classification criteria as held for sale at the time of acquisition (see item 11). (c) the net cash flows attributable to operating, investing and financing activities of discontinued operations. These disclosures may be presented in the explanatory notes or in the financial statements tables. These disclosures are not required for groups of assets held for sale that are newly acquired subsidiaries that meet the classification criteria as held for sale at the time of acquisition (see item 11); (d) the amount of the result of continuing operations and that of discontinued operations attributable to controlling shareholders. This disclosure may be presented alternatively in explanatory notes dealing with the result.

33A. If the entity presents the statement of profit or loss as a separate statement, as described in item 10A of Technical Pronouncement CPC 26, an identified section related to discontinued operations must be presented in that statement.

The entity must restate the disclosures of item 33 for prior periods presented in the financial statements, so that the disclosures relate to all operations that have been discontinued at the date of the balance sheet of the last period presented.
Adjustments made in the current period in amounts previously presented in discontinued operations that are directly related to the disposal of discontinued operation in a prior period must be classified separately in discontinued operations. The nature and amount of these adjustments must be disclosed. Examples of circumstances in which these adjustments may occur include the following:
(a) the resolution of uncertainties resulting from the terms of the disposal transaction, such as the resolution of adjustments in the purchase price and indemnity issues with the buyer; (b) the resolution of uncertainties resulting from and directly related to the operations of the component before its disposal, such as environmental and product warranty obligations retained by the seller; (c) the settlement of employee benefit plan obligations, provided that this settlement is directly related to the disposal transaction.
If the entity ceases to classify a component of the entity as held for sale, the results of the operations of the component previously presented in discontinued operations, according to items 33 to 35, must be reclassified and included in the result of continuing operations in all periods presented. The amounts relating to prior periods must be described as having been restated.

36A. The entity that is committed to a sale plan of the control of a subsidiary must disclose the information required in items 33 to 36 when the subsidiary is a group of assets and liabilities held for sale within the definition of discontinued operation according to item 32.

Gain or loss related to continuing operation

Any gain or loss relating to the remeasurement of non-current asset classified as held for sale that does not meet the definition of discontinued operation must be included in the results of continuing operations.

Presentation of non-current asset classified as held for sale

The entity must present the non-current asset classified as held for sale separately from other assets in the balance sheet. Liabilities of a group of assets classified as held for sale must be presented separately from other liabilities in the balance sheet. These assets and liabilities must not be offset nor presented in a single amount. The main classes of assets and liabilities classified as held for sale must be disclosed separately in the balance sheet or in the explanatory notes, except as permitted by item 39. The entity must present separately any accumulated revenue or expense recognized directly in equity (other comprehensive income) related to a non-current asset or a group of assets classified as held for sale.
If the group of assets held for sale is a newly acquired subsidiary that meets the classification criteria as held for sale at the time of acquisition (see item 11), disclosure of the main classes of assets and liabilities is not required.
The entity must not reclassify or restate amounts disclosed of non-current assets or of assets and liabilities of groups of assets classified as held for sale in the balances of prior periods to reflect the classification in the balance sheet of the last period presented.

Additional disclosures

The entity must disclose the following information in the explanatory notes of the period in which the non-current asset has been classified as held for sale or sold:
(a) description of the non-current asset (or group of assets); (b) description of the facts and circumstances of the sale, or that led to the expected disposal, form and expected schedule for this disposal; (c) gain or loss recognized according to items 20 to 22 and, if not presented separately in the statement of profit or loss, the line in the statement of profit or loss that includes this gain or loss; (d) if applicable, segment in which the non-current asset or the group of assets held for sale is presented according to Technical Pronouncement CPC 22 - Segment Information.
If item 26 or item 29 applies, the entity must disclose, in the period of the decision to change the sale plan of the non-current asset held for sale, the description of the facts and circumstances that led to the decision and the effect of this decision on the results of operations for this period and any prior period presented.

Transitional provision

The entity may apply retrospectively the requirements of Technical Pronouncement to all non-current assets or groups of assets that meet the classification criteria as held for sale and to operations that meet the classification criteria as discontinued, provided that the evaluations and other information necessary to apply this Technical Pronouncement have been obtained at the time when these criteria were originally met.

Appendix A – Definition of terms
This Appendix is an integral part of this Technical Pronouncement.

Cash-generating unit is the smallest identifiable group of assets that generates cash inflows and that is largely independent of the cash inflows of other assets or groups of assets.
Component of an entity is the operation and cash flow that can be clearly distinguished, operationally and for financial statements purposes, from the rest of the entity.
Costs to sell are the incremental costs directly attributable to the disposal of an asset or group of assets held for sale, excluding financial expense and income tax.
Current asset is an asset that meets any of the following criteria:
(a) is expected to be realized, or is intended to be sold or consumed in the normal course of the entity's operating cycle; (b) is held essentially for the purpose of being traded; (c) is expected to be realized within the period of up to twelve months after the balance sheet date; or (d) is cash or cash equivalent, unless its exchange or use has limitations for the settlement of liability during, at least, twelve months after the balance sheet date. Discontinued operation is the component of the entity that has been disposed of or is classified as held for sale and:
(a) represents a major line of separate business or geographical area of operations; (b) is an integral part of a single coordinated plan to sell a major line of separate business or geographical area of operations; or (c) is a subsidiary acquired exclusively with the objective of resale. Group of assets held for sale (placed for sale) is a group of assets to be disposed of, by sale or otherwise, together as a group of assets in a single transaction, and liabilities directly associated with these assets that will be transferred in the transaction. The group of assets includes goodwill acquired in business combinations if the group of assets is a cash-generating unit to which goodwill has been allocated according to the requirements of items 77 to 83 of Technical Pronouncement CPC 01 - Impairment of Assets or if it is an operation within that cash-generating unit. Fair value is the price that would be received to sell an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (see Technical Pronouncement CPC 46). Firm purchase commitment is an agreement with an unrelated party, binding both parties and generally with legal bond, that (a) specifies all significant terms, including the price and schedule of the transaction, and (b) includes a penalty for non-performance, which is sufficiently large to make performance highly probable. Highly probable means more likely than simply probable. Non-current asset is an asset that does not meet the definition of current asset. Probable is what has more chance of occurring than not occurring. Recoverable amount is the highest value between the fair value of an asset less costs to sell and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuous use of an asset and its disposal at the end of its useful life.

Extension of the required period to complete a sale B1. As indicated in paragraph 9, the extension of the period during which the sale is required to be completed does not preclude the asset or group of assets from being classified as held for sale if the delay is caused by events or circumstances beyond the entity’s control and there is sufficient evidence that the entity remains committed to its plan to sell the asset or group of assets. An exception to the one-year requirement set out in paragraph 8 should, therefore, apply to situations where those events or circumstances occur. These are:
(a) at the date the entity becomes committed to a plan to sell a non-current asset or group of assets held for sale, it expects, reasonably, that others (not the buyer) will impose conditions on the transfer of the asset or group of assets that will extend the period required to complete the sale, and:
(i) the actions necessary to respond to those conditions cannot be initiated until a firm purchase commitment is obtained; and (ii) a firm purchase commitment is highly probable within one year.
(b) the entity obtains a firm purchase commitment and, as a result, the buyer or other buyers unexpectedly impose conditions on the transfer of the non-current asset previously classified as held for sale that will extend the period required to complete the sale, and:
(i) timely action has been taken to respond to the conditions; and (ii) a favorable resolution of the factors that caused the delay is expected.
(c) during the initial one-year period, circumstances arise that were previously considered unlikely and, as a result, the non-current asset or group of assets previously classified as held for sale is not sold by the end of that period, and:
(i) during the initial one-year period, the entity took the necessary actions to respond to the change in circumstances; (ii) the non-current asset or group of assets held for sale is being offered for sale at a price that is reasonable, given the change in circumstances; and (iii) the criteria in paragraphs 7 and 8 are met.

Available for immediate sale (paragraph 7)
To qualify for classification as held for sale, a non-current asset (or group of assets) must be available for immediate sale in its present condition, subject only to terms that are usual and customary for the sale of such assets (or group of assets) (paragraph 7). A non-current asset (or group of assets) is available for immediate sale if the entity currently has the intention and ability to transfer the asset (or group of assets) to a buyer in its present condition. Examples 1 to 3 illustrate situations in which the criterion in paragraph 7 would or would not be met.

Example 1
The entity is committed to a plan to sell its headquarters building and has initiated actions to locate a buyer.
(a) The entity intends to transfer the building to a buyer after vacating it. The time required to vacate the building is usual and customary for sales of this type of asset. The criterion in paragraph 7 would be met on the date of commitment to the plan. (b) The entity continues to use the building until the construction of a new headquarters building is completed. The entity does not intend to transfer the existing building to a buyer until the construction of the new building is completed (and it vacates the existing building). The delay in the timing of the transfer of the existing building imposed by the entity (seller) demonstrates that the building is not available for immediate sale. The criterion in paragraph 7 would not be met until the construction of the new building is completed, even if a firm purchase commitment for the future transfer of the existing building is obtained in advance.

Example 2
The entity is committed to a plan to sell a manufacturing facility and has initiated actions to locate a buyer. On the date of commitment to the plan, there are customer orders in progress that are not completed.
(a) The entity intends to sell the manufacturing facility with its operations. Any customer orders in progress at the date of sale will be transferred to the buyer. The transfer of customer orders in progress at the date of sale will not affect the timing of the transfer of the facility. The criterion in paragraph 7 would be met on the date of implementation of the plan. (b) The entity intends to sell the manufacturing facility, but without its operations. The entity does not intend to transfer the facility to a buyer until all operations of the facility are terminated and customer orders in progress are eliminated. The delay in the timing of the transfer of the facility imposed by the entity (seller) demonstrates that the facility is not available for immediate sale. The criterion in paragraph 7 would not be met until the operations

Example 3
The entity acquires, through foreclosure, a property that includes land and buildings that it intends to sell.
(a) The entity does not intend to transfer the property to a buyer until it completes renovations to increase the sale value of the property. The delay in the timing of the transfer of the property imposed by the entity (seller) demonstrates that the property is not available for immediate sale. The criterion in paragraph 7 would not be met until the renovations are completed. (b) After the renovations are completed and the property is classified as held for sale, but before a firm purchase commitment is obtained, the entity becomes aware of environmental damage requiring remediation. The entity still intends to sell the property. However, the entity does not have the ability to transfer the property to a buyer until the repair is completed. The delay in the timing of the transfer of the property, imposed by others before a firm purchase commitment is obtained, demonstrates that the property is not available for immediate sale. The criterion in paragraph 7 would continue not to be met. The property would be reclassified as held for use, in accordance with paragraph 26.

Expected completion of sale within one year (paragraph 8)

Example 4
To qualify for classification as held for sale, the sale of a non-current asset (or group of assets) must be highly probable (paragraph 7) and the transfer of the asset (or group of assets) must be expected to qualify for recognition as a completed sale within one year (paragraph 8). This criterion would not be met if, for example:
(a) the entity, which is a financial and commercial leasing company, is holding for sale or lease equipment that has recently ceased to be leased and the last form of future transaction (sale or lease) has not yet been determined.
(b) the entity is committed to a plan to “sell” a property that is in use and the transfer of the property will be accounted for as a sale and finance leaseback.

Exceptions to the criterion in paragraph 8
An exception to the one-year requirement of paragraph 8 applies in limited situations where the period required to complete the sale of a non-current asset (or group of assets) will be (or was) extended by events or circumstances beyond the entity’s control and the specific conditions are met (paragraphs 9 and B1). Examples 5 to 7 illustrate these situations.

Example 5
The entity in the power generation industry is committed to a plan to sell a group of assets that represents a significant part of its regulated operations. The sale requires regulatory approval that may extend the time necessary to complete the sale beyond one year. The actions necessary to obtain this approval cannot be initiated until a buyer is known and a firm purchase commitment is obtained. However, a firm purchase commitment is highly probable within one year. In this situation, the conditions in paragraph B1(a) for an exception to the one-year requirement of paragraph 8 would be met.

Example 6
The entity is committed to a plan to sell a manufacturing facility in its current condition and classifies the facility as held for sale on that date. After a firm purchase commitment is obtained, the buyer’s inspection of the property identifies environmental damage whose existence was not previously known. The entity is required to repair the damage, which will extend the period necessary to complete the sale beyond one year. However, the entity has initiated actions to repair the damage and satisfactory remediation of the damage is highly probable. In this situation, the conditions in paragraph B1(b) for an exception to the one-year requirement of paragraph 8 would be met.

Example 7
The entity is committed to a plan to sell a non-current asset and classifies the asset as held for sale on that date.
(a) During the initial one-year period, market conditions that existed on the date the asset was initially classified as held for sale deteriorated and, as a result, the asset is not sold by the end of that period. During this period, the entity actively solicited but received no reasonable offers to buy the asset and, in response, reduced the price. The asset continues to be actively marketed at a price that is reasonable, considering the changes in market conditions and the criteria in paragraphs 7 and 8 are therefore met. In this situation, the conditions in paragraph B1(c) for an exception to the one-year requirement of paragraph 8 would be met. At the end of the initial one-year period, the asset would continue to be classified as held for sale. (b) During the subsequent one-year period, market conditions deteriorate further and the asset is not sold by the end of that period. The entity believes that market conditions will improve and no longer reduces the price of the asset. The asset continues to be held for sale, but at a price above its current fair value. In this situation, the absence of a price reduction demonstrates that the asset is not available for immediate sale, as required by paragraph 7. Furthermore, paragraph 8 also requires that an asset be marketed at a price that is reasonable relative to its current fair value. Therefore, the conditions in paragraph B1(c), for an exception to the one-year requirement of paragraph 8, would not be met. The asset would be reclassified as held for use in accordance with paragraph 26.

Determining whether an asset has been abandoned Paragraphs 13 and 14 of the Pronouncement specify the requirements for when assets should be treated as abandoned. Example 8 illustrates when an asset is not considered abandoned.

Example 8
The entity ceases to use a manufacturing unit because demand for its product has decreased. However, the factory is kept in operating condition and it is expected that it will be used again if demand increases. The factory is not considered abandoned.

Presentation of discontinued operation that has been abandoned Paragraph 13 of the Pronouncement prohibits assets to be abandoned from being classified as held for sale. However, if the assets to be abandoned constitute a major line of business or geographical area of operations, they will be reported as discontinued operations, on the date they are abandoned. Example 9 illustrates this case.

Example 9
In October 20x5, an entity decides to abandon all its cotton spinning factories, which constitute an important line of business. All work is halted in the cotton spinning factories during the year ended December 31, 20x6. In the financial statements for the year ended December 31, 20x5, the results and cash flows of the cotton spinning factories are treated as continuing operations. In the financial statements for the year ended December 31, 20x6, the results and cash flows of the cotton spinning factories are treated as discontinued operations and the entity makes the disclosures required by paragraphs 33 and 34 of the Pronouncement.

Allocation of impairment loss of a group of assets Paragraph 23 of the Pronouncement requires that an impairment loss on assets (or any subsequent gain), recognized for a group of assets, reduces (or increases) the carrying amount of the non-current assets in the group that are within the scope of the measurement requirements of the Pronouncement, in the allocation order defined by paragraphs 104 and 122. Example 10 illustrates the allocation of impairment loss on assets in a group of assets.

Example 10
The entity plans to dispose of a group of its assets (as an asset sale). The assets form a group of assets, and are measured as follows:

Carrying amount at the end of the period, before classification as held for sale | Carrying amount as remeasured immediately before classification as held for sale --- | --- $ $ Goodwill 1,500 | 1,500 Property, plant and equipment (stated at revalued amounts) 4,600 | 4,000 Property, plant and equipment (stated at cost) 5,700 | 5,700 Inventories 2,400 | 2,200 Financial assets 1,800 | 1,500 Total 16,000 | 14,900

The entity recognizes a loss of $1,100 ($16,000 – $14,900) immediately before classifying the group of assets as held for sale.
The entity estimates that the fair value less costs to sell of the group of assets totals $13,000. Since the entity measures the group of assets classified as held for sale at the lower of its carrying amount and fair value less costs to sell, the entity recognizes an impairment loss of $1,900 ($14,900 – $13,000) when the group is initially classified as held for sale. The impairment loss is allocated to non-current assets to which the measurement requirements of the Pronouncement apply. Therefore, no impairment loss is allocated to inventories and financial assets. The loss is allocated to other assets, in the allocation order defined by paragraphs 104 and 122 of the Pronouncement.

The allocation can be illustrated as follows:

Carrying amount as remeasured immediately before classification as held for sale | Impairment loss allocated | Carrying amount after allocation of impairment loss --- | --- | --- $ $ $ Goodwill 1,500 | (1,500) | 0 Property, plant and equipment (stated at revalued amounts) 4,000 | (165) | 3,835 Property, plant and equipment (stated at cost) 5,700 | (235) | 5,465 Inventories 2,200 | – | 2,200 Financial assets 1,500 | – | 1,500 Total 14,900 | (1,900) | 13,000

First, the impairment loss reduces any goodwill. Next, the residual loss is allocated to other assets proportionally based on the carrying amounts of those assets.

Presentation of discontinued operations in the statement of profit or loss Paragraph 33 of the Pronouncement requires the entity to disclose a single amount in the statement of profit or loss for discontinued operations with an analysis in the notes to the financial statements or in a section of the statement of profit or loss of continuing operations. Example 11 illustrates how these requirements can be met.

Example 11
XYZ GROUP – STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED DECEMBER 31, 20X2 (illustrating classification of expenses by function) (in thousands of $) 20X2 20X1

Continuing operations
Revenue X X
Cost of goods sold (X) (X)
Gross profit X X
Other income X X
Distribution costs (X) (X)
Administrative expenses (X) (X)
Other expenses (X) (X)
Share of profit of associates X X
Profit before finance costs X X
Finance costs (X) (X)
Profit before tax X X
Income tax expense (X) (X)
Profit for the period from continuing operations X X

Discontinued operations
Profit for the period from discontinued operations (a) X X Net profit for the period X X

Attributable to:
Owners of the parent
Profit for the period from continuing operations X X Profit for the period from discontinued operations X X Profit for the period attributable to owners of the parent X X Non-controlling interests Profit for the period from continuing operations X X Profit for the period from discontinued operations X X Profit for the period attributable to non-controlling interests X

(a) The necessary analysis would be given in the notes to the financial statements.

Presentation of non-current assets or groups of assets classified as held for sale Paragraph 38 of the Pronouncement requires the entity to present a non-current asset classified as held for sale and the assets of groups of assets classified as held for sale separately from other assets, in the statement of financial position. The liabilities of groups of assets classified as held for sale are also presented separately from other liabilities in the statement of financial position. These assets and liabilities are not offset and presented as a single amount. Example 12 illustrates these requirements.

Example 12
At the end of 20X5, the entity decides to dispose of part of its assets (and directly associated liabilities). The disposal, which meets the criteria in paragraphs 7 and 8 to be classified as held for sale, takes the form of two groups of disposal, as below:

Carrying amount after classification as held for sale Group of assets I: $ | Group of assets II: $ --- | --- Property, plant and equipment 4,900 | 1,700 Financial asset 1,400 (a) | – Liabilities (2,400) | (900) Net carrying amount of the group of assets 3,900 | 800

(a) the value of $400 relating to these assets was recognized in other comprehensive income and accumulated in equity.

The presentation in the entity’s statement of financial position of the groups of assets classified as held for sale can be shown as follows:

20X5 20X4
ASSETS
Current assets
DDD X X
EEE X X

SECURITIES AND EXCHANGE COMMISSION COMMISSION
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. 108, OF MAY 20, 2022 20X5 20X4 GGG X X Values recognized in other comprehensive income and accumulated equity related to non-current assets held for sale 400 – X X Non-controlling interests X X Total equity X X Total Liabilities and Equity X X The presentation requirements for assets (or disposal groups) classified as held for sale at the end of the period do not apply retrospectively. Comparative balance sheets of any periods prior, therefore, are not restated. Measurement and presentation of subsidiaries acquired for resale and classified as held for sale A subsidiary acquired for resale is not exempt from consolidation, in accordance with the Technical Pronouncement CPC 36 – Consolidated Financial Statements, unless the acquirer is an entity of investment, as defined in Technical Pronouncement CPC 36, and is required to measure the investment in that subsidiary at fair value through profit or loss. However, if it meets the criteria established in item 11, it is presented as a group of assets classified as held for sale. Example 13 illustrates these requirements. Example 13 Entity A acquires Entity H, which is a parent with two subsidiaries, S1 and S2. S2 is acquired exclusively for sale and meets the criteria to be classified as held for sale. According to item 32(c), S2 is also a discontinued operation. The estimated fair value less costs to sell of S2 is $ 135. Entity A accounts for S2 as follows:
 initially, measures the identifiable liabilities of S2 at fair value, i.e., at $ 40.
 initially, measures the assets acquired as the fair value less costs to sell of S2 ($ 135) plus the fair value of identifiable liabilities ($ 40), i.e., at $ 175.
 at the end of the period, remeasures the group of assets at the lower of its cost and fair value less costs to sell, i.e., at $ 130. Liabilities are remeasured in accordance with the applicable Pronouncements , i.e., at $ 35. The total assets are measured at $ 130 + $ 35, i.e., at $ 165.

Lineage: No known changes

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