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LEASING TRANSACTIONS (Tables)
 12 Months Ended
Dec. 31, 2021
The discount rates were obtained by reference to the Company’s incremental borrowing rate. In August 2021 the Company reviewed the methodology for discount rates estimation, which is now based on the risk-free rate adjusted to the reality of the Company, in order to reflect more appropriately its credit risk, and the economic conditions on the date of the agreement, as follows:

The discount rates were obtained by reference to the Company’s incremental borrowing rate. In August 2021 the Company reviewed the methodology for discount rates estimation, which is now based on the risk-free rate adjusted to the reality of the Company, in order to reflect more appropriately its credit risk, and the economic conditions on the date of the agreement, as follows:

 

 

Marginal rates    Annual rate (%)    Monthly rate (%)
Initial application     
Up to two years   7.96    0.64
Three to five years   10.64    0.85
Six to twenty years   13.17    1.04
        
Contracts entered – 2019 at 2021       
Up to three years   6.87    0.56
Three to four years   7.33    0.59
Four to twenty years   8.08    0.65
        
Contracts entered – August at December 2021 (1)       
Up to five years   5.81   0.47
Six to ten years   5.89   0.48
Eleven to fifteen years   5.95   0.49
Sixteen to thirty years   5.95   0.49
        

 

(1)Monthly the Company calculates the addition to the rate to be applied to the new contracts. For the purposes of publication, these are presented at the average rates used.

 
Changes in the right-of-use assets are as follows:

Changes in the right-of-use assets are as follows:

 

     Real estate property    Vehicles    Total
Balances at December 31, 2019   206    71    277 
Disposals (contracts terminated)   (9)   —      (9)
Amortization   (25)   (40)   (65)
Addition   6    —      6 
Remeasurement   7    (4)   3 
Balances at December 31, 2020   185    27    212 
Disposals (contracts terminated)   (5)   —      (5)
Amortization (1)   (8)   (41)   (49)
Addition   11    —      11 
Remeasurement (2)   9    48    57 
Balances at December 31, 2021   192    34    226 

 

(1)Amortization of the right-of-use assets is recognized in the Income Statement is net of use of the credits of PIS, Pasep and Cofins taxes on leasing payments of R$1 (R$2 on December 31, 2020).
(2)The Company has identified events giving rise to modifications of their principal contracts. When occurred, the lease liabilities adjustments are recognized in counterpart of the right-of-use assets.
The changes in the lease liabilities are as follows:

The changes in the lease liabilities are as follows:

 

   2019
Balances at December 31, 2019   288 
Addition   6 
Disposals (contracts terminated)   (10)
Accrued interest   29 
Payment of principal portion of lease liability   (84)
Payment of interest   (4)
Remeasurement (2)   2 
Balances at December 31, 2020   227 
Addition   11 
Disposals (contracts terminated)   (5)
Accrued interest (1)   27 
Payment of principal portion of lease liability   (70)
Payment of interest   (3)
Remeasurement (2)   57 
Balances at December 31, 2021   244 
      
Current liabilities   62 
Non-current liabilities   182 

 

(1)Financial expenses recognized in the income statement are net of PIS/Pasep and Cofins taxes credits on lease payments in the amounts of R$2 (R$2 on December 31, 2020).
(2)The Company identified events that give rise to modifications of their principal contracts. When occurred, the lease liabilities adjustments are recognized in counterpart of the right-of-use assets.
The potential right to recovery of PIS/Pasep and Cofins taxes embedded in the leasing consideration, according to the periods specified for payment, is as follows:

The potential right to recovery of PIS/Pasep and Cofins taxes embedded in the leasing consideration, according to the periods specified for payment, is as follows:

 

Cash flow  Nominal  Adjusted to present value
Consideration for the leasing   663    244 
Potential PIS/Pasep and Cofins (9.25%)   56    18 
The cash flows of the contracts containing a lease are, in their majority, indexed to the IPCA inflation index on an annual basis. Below is an analysis of maturity of lease contracts:

The cash flows of the contracts containing a lease are, in their majority, indexed to the IPCA inflation index on an annual basis. Below is an analysis of maturity of lease contracts:

 

      
2022    65 
2023    29 
2024    29 
2025    28 
2026    28 
2027 at 2046    484 
Undiscounted values    663 
Embedded interest    (419)
Lease liabilities    244