Company: CTTRF
Filing Date: 2025-04-30
Form Type: 20-F
Source: 0001292814-25-001765
Chunk: 308

Company: Controladora Vuela Compania de Aviacion, S.A.B. de C.V.
Filing Date: 2025-04-30
Form: 20-F
Item: Item 19
Chunk 308
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 the asset                                                                   

In that case, the Company also recognizes an associated
liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.

ii) Impairment of financial assets

The Company assesses at each reporting date whether there
is objective evidence that a financial asset or a group of financial assets is credit-impaired. A financial asset is credit-impaired when
one or more events have occurred since the initial recognition of an asset (an incurred “loss event”) that have an impact
on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

Evidence that a financial asset is credit-impaired may include
indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in receivable,
the probability that they will enter bankruptcy or other financial reorganization and observable data indicating that there is a measurable
decrease in the estimated cash flows, such as changes in arrears or economic conditions that correlate with defaults. Further disclosures
related to impairment of financial assets are also provided in (Note 8).

For trade receivables, the Company applies a simplified approach
in calculating Expected Credit Losses (ECLs). Therefore, the Company does not track changes in credit risk, but instead recognizes a loss
allowance based on lifetime ECLs at each reporting date.

Based on this evaluation, allowances are taken into account
for the expected losses of these receivables (Note 8).

iii) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition,
as financial liabilities at FVTPL, including loans and borrowings, accounts payables to suppliers, unearned transportation revenue, other
accounts payable and financial instruments.

All financial liabilities are recognized initially at fair
value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Subsequent measurement

The measurement of financial liabilities depends on their
classification as described below:

Financial liabilities at amortized cost

Accounts payable are subsequently measured at amortized cost
and do not bear interest or result in gains and losses due to their short-term nature.

Loans and borrowings are the category most relevant to the
Company. After initial recognition at fair value (consideration received), interest bearing loans and borrowings are subsequently measured
at amortized cost using the Effective Interest Rate method (EIR). Gains and losses are recognized in