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20. INTANGIBLE ASSETS | 12 Months Ended
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Dec. 31, 2019
Disclosure of detailed information about intangible assets [abstract] |
INTANGIBLE ASSETS | 20. INTANGIBLE ASSETS The composition of the balance at December 31, 2019 and 2018 is as follow:
|  | 2019 |  |  |  | 2018 |
|  | Historical cost |  |  |  | Accumulated amortization |  |  |  | Residual value |  |  |  | Historical cost |  |  |  | Accumulated amortization |  |  |  | Residual value |
In service |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Useful life defined |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporary easements |  | 12 |  |  |  | (4 | ) |  |  | 8 |  |  |  | 11 |  |  |  | (3 | ) |  |  | 8 |
Onerous concession |  | 20 |  |  |  | (13 | ) |  |  | 7 |  |  |  | 19 |  |  |  | (12 | ) |  |  | 7 |
Assets of concession (1) |  | 20,039 |  |  |  | (8,522 | ) |  |  | 11,517 |  |  |  | 18,674 |  |  |  | (7,994 | ) |  |  | 10,680 |
Others |  | 77 |  |  |  | (67 | ) |  |  | 10 |  |  |  | 85 |  |  |  | (66 | ) |  |  | 19 |
|  | 20,148 |  |  |  | (8,606 | ) |  |  | 11,542 |  |  |  | 18,789 |  |  |  | (8,075 | ) |  |  | 10,714 |
In progress |  | 82 |  |  |  | – |  |  |  | 82 |  |  |  | 63 |  |  |  | – |  |  |  | 63 |
Net intangible assets |  | 20,230 |  |  |  | (8,606 | ) |  |  | 11,624 |  |  |  | 18,852 |  |  |  | (8,075 | ) |  |  | 10,777 |
(1) | The rights of authorization to generate wind power granted to the subsidiary Parajuru and Volta do Rio, valued at R$ 127, and of the gas distribution concession, granted to Gasmig, valued at R$ 426, are classified in the consolidated statement of financial position under intangibles assets and are amortized by the straight-line method, for the period of the concessions.
Changes in Intangible assets are as follow:
|  | 2018 |  |  |  | Additions |  |  |  | Disposals (2) |  |  |  | Amortization |  |  |  | Transfers (1) |  |  |  | 2019 |
In service |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Useful life defined |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporary easements |  | 9 |  |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | 8 |
Onerous concession |  | 7 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 7 |
Assets of concession |  | 10,680 |  |  |  | 891 |  |  |  | (41 | ) |  |  | (698 | ) |  |  | 685 |  |  |  | 11,517 |
Others |  | 18 |  |  |  | 7 |  |  |  | – |  |  |  | (5 | ) |  |  | (10 | ) |  |  | 10 |
|  | 10,714 |  |  |  | 898 |  |  |  | (41 | ) |  |  | (704 | ) |  |  | 675 |  |  |  | 11,542 |
In progress |  | 63 |  |  |  | 36 |  |  |  | – |  |  |  | – |  |  |  | (17 | ) |  |  | 82 |
Net intangible assets |  | 10,777 |  |  |  | 934 |  |  |  | (41 | ) |  |  | (704 | ) |  |  | 658 |  |  |  | 11,624 |
(1) | The transfers were made between Intangible assets, concession contract assets and property, plant and equipment are follows: (1) R$685 from concession contract assets to intangible assets; (2) (R$4) from intangible assets to property, plant and equipment and; and (3) (R$23) from intangible assets to concession financial assets.
(2) | This includes the impairment, in the amount of R$ 22 recognized in the Income Statement under “Other expenses”. The test of impairment of intangible assets, relating to the authorization for wind powergeneration granted to Volta do Rio, recognized in 2018 as part of the its business combination, arises from non- achievement of the operational performance expected in 2019 for the wind generation assets of the subsidiary. The Value in Use of the assets was calculated based on the projection of future expected cash flows for the operation of the assets of the subsidiary, brought to present value by the weighted average cost of capital defined for the company’s activity, using the Firm Cash Flow (FCFF) methodology.
|  | 2017 |  |  |  | Assets arising from business combination |  |  |  | Additions |  |  |  | Disposals |  |  |  | Effects of first-time adoption of IFRS 15 |  |  |  | Amortization |  |  |  | Transfer to Held for sale |  |  |  | Transfers |  |  |  | 2018 |
In service |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Useful life defined |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporary easements |  | 10 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | – |  |  |  | 9 |
Onerous concession |  | 8 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | – |  |  |  | 7 |
Assets of concession |  | 10,435 |  |  |  | 162 |  |  |  | – |  |  |  | (23 | ) |  |  | – |  |  |  | (668 | ) |  |  | – |  |  |  | 774 |  |  |  | 10,680 |
Others |  | 17 |  |  |  | 4 |  |  |  | 1 |  |  |  | – |  |  |  | – |  |  |  | (5 | ) |  |  | (7 | ) |  |  | 8 |  |  |  | 18 |
|  | 10,470 |  |  |  | 166 |  |  |  | 1 |  |  |  | (23 | ) |  |  | – |  |  |  | (675 | ) |  |  | (7 | ) |  |  | 782 |  |  |  | 10,714 |
In progress |  | 686 |  |  |  | – |  |  |  | 33 |  |  |  | (4 | ) |  |  | (621 | ) |  |  | – |  |  |  | – |  |  |  | (31 | ) |  |  | 63 |
Net intangible assets |  | 11,156 |  |  |  | 166 |  |  |  | 34 |  |  |  | (27 | ) |  |  | (621 | ) |  |  | (675 | ) |  |  | (7 | ) |  |  | 751 |  |  |  | 10,777 |
|  | 2016 |  |  |  | Additions |  |  |  | Disposals |  |  |  | Amortization |  |  |  | Transfers (1) |  |  |  | 2017 |
In service |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Useful life defined |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporary easements |  | 10 |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |  |  |  | 10 |
Onerous concession |  | 9 |  |  |  | – |  |  |  | – |  |  |  | (1 | ) |  |  | – |  |  |  | 8 |
Assets of concession |  | 9,248 |  |  |  | – |  |  |  | (11 | ) |  |  | (638 | ) |  |  | 1,836 |  |  |  | 10,435 |
Others |  | 18 |  |  |  | – |  |  |  | – |  |  |  | (7 | ) |  |  | 6 |  |  |  | 17 |
|  | 9,285 |  |  |  | – |  |  |  | (11 | ) |  |  | (646 | ) |  |  | 1,842 |  |  |  | 10,470 |
In progress |  | 1,535 |  |  |  | 1,105 |  |  |  | (8 | ) |  |  | – |  |  |  | (1,946 | ) |  |  | 686 |
Net intangible assets |  | 10,820 |  |  |  | 1,105 |  |  |  | (19 | ) |  |  | (646 | ) |  |  | (104 | ) |  |  | 11,156 |
(1) | Balances transferred to financial assets.
Concession assets The energy and gas distribution infrastructure assets already in service and that will be fully amortized during the concession term are recorded as intangible assets. On September 19, 2019 the third amendment to the concession contract for gas distribution of the subsidiary Gasmig was signed, replacing the contractual obligation to build the gas pipeline to serve the Nitrogenated Fertilizer Unit (UFN-V), to be built by Petrobras in the Minas Triangle region, by the payment of a concession grant fee of R$891. This amendment extended the period of Gasmig’s concession contract to 2053. The grant fee was paid on September 26, 2019. The amount will be added to the Remuneration Base of Assets of Gasmig, to be considered in the process of tariff review by the Grantor as an intangible asset to be amortized until the end of the concession contract, producing immediate effects in terms of setting and review of tariffs. The amount of additions in 2019 includes R$2 (R$4 in 2018 and R$ 71 in 2017) of borrowing costs, as presented in Note 24. The intangible asset easements, onerous concessions, assets of concession, and others, are amortized by the straight-line method taking into account the consumption pattern of these rights. The main amortization rates, which take into account the useful life that management expects for the asset, and reflect the expected pattern of their consumption, are as follows:
Energy |  | (%) |  |  |  | Administration |  | (%) |
System cable – below 69 KV |  | 6.67 |  |  |  | Software |  | 20.00 |
System cable – below 69 KV |  | 3.57 |  |  |  | Vehicles |  | 14.29 |
Structure – Posts |  | 3.57 |  |  |  | General equipment |  | 6.25 |
Overhead distribution transformer |  | 4.00 |  |  |  | Buildings |  | 3.33 |
Circuit breaker – up to 69 kV |  | 3.03 |  |  |  |  |  |  |
Capacitor bank – up to 69 kV |  | 6.67 |  |  |  |  |  |  |
Voltage regulator – up to 69 kV |  | 4.35 |  |  |  |  |  |  |
Gas |  | (%) |  |  |  | Administration |  | (%) |
Tubing |  | 3.33 |  |  |  | Software |  | 20.00 |
Buildings, works and improvements |  | 4.00 |  |  |  | Vehicles |  | 20.00 |
Improvements in leased properties |  | 10.00 |  |  |  | Data processing equipment |  | 20.00 |
Machinery and equipment |  | 5.00 a 20.00 |  |  |  | Furniture |  | 10.00 |
The annual average amortization rate is 4.01%. The segregation by activity is as follows.
Hydroelectric Generation | Wind Power Generation | Gas | Distribution | Administration
19.74 | 16.90 | 2.87 | 3.88 | 16.03
Under the regulations of the energy segment, property, plant and equipment used in the distribution concession are linked to these services, and cannot be withdrawn, disposed of, assigned or provided in guarantee without the prior express authorization of the Regulator.

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- Definition The disclosure of intangible assets with an indefinite useful life. [Refer: Intangible assets with indefinite useful life] + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 38 -IssueDate 2019-01-01 -Paragraph 122 -Subparagraph a -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=38&code=ifrs-tx-2019-en-r&anchor=para_122_a&doctype=Standard -URIDate 2019-03-27 + Details
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