Brazil’s official gazette of December 28 published Law No. 11,638/2007, which amends several articles of Brazil’s Corporations’ Act (Law No. 6,404/76). The law brings a set of complex rules that change accounting rules and financial statements of Brazilian corporations. Most of the changes aim to bring Brazilian GAAP closer to international accounting standards. The law creates the statement of cash flows and the value added statement; it also changes rules concerning accounting criteria and methods; classification of assets; restrictions for the use of deferred asset accounts; structure and limitations of the equity accounts; criteria for valuation of cash equivalents; criteria for valuation of intangible assets, assets allocated to long-term operations and long-term liabilities; amortization of items booked as deferred assets; profits reserves and reserves for tax incentives; valuation of controlled and affiliate companies according to the equity method. The law innovates by requiring large companies not formed as corporations to follow many of its changes. For that purpose, a large company is a company or group of companies under common control which, in the preceding year, had assets in excess of BRL 240 million (app US$ 137 million) or annual gross income above BRL 300 million (app US$ 171 million).
21Jan 2008