Cemex 1997 Annual Report Download - page 73

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67
Total income tax expense includes $191,021 and $238,000 from foreign subsidiaries and $212,948 and $548,528
from Mexican subsidiaries for the years ended 1997 and 1996, respectively.
The Company, as a holding company, prepares its income tax return on a consolidated basis, which resulted in tax
benefits of $760,654 in 1997 and $633,954 in 1996.
The Company has accumulated tax loss carryforwards in Mexico which may be offset against taxable income in
the succeeding ten years according to the Income Tax Law. The expiration dates of such losses are as follows:
Amount of Year of
Year in which tax loss occurred carryforward expiration
1994 $ 5,573,243 2004
1995 5,662,977 2005
$ 11,236,220
For the year ending December 31, 1997, the Company utilized tax loss carryforwards of $2,113,029 which
generated a benefit of $718,430.
Any business assets tax levied in excess of income tax for a given year may be recovered, revalued for inflation, in
any of the succeeding ten years, provided that the income tax levied exceeds the business assets tax.
The recoverable business assets tax as of December 31, 1997, is as follows:
Year in which business assets Amount of Year of
tax exceeded income tax carryforward expiration
1989 $ 14,972 1999
1990 22,546 2000
1996 5,415 2006
1997 202,297 2007
$ 245,230
At December 31, 1997, deferred income taxes have been recorded on timing differences as follows:
Consolidated
Tax depreciation exceeding book depreciation $ 594,869
Inventories 264,279
Financing costs capitalized and other items 215,350
$ 1,074,498
The effects of inflation are not recognized for tax purposes in some countries in which the Company operates, or
they are recognized in a manner different from the accounting principles used by the Company. These effects, as
well as other differences between accounting bases and tax bases, may generate differences between the expected
income tax rate and the effective rate shown in the consolidated income statements.
15.- FOREIGN CURRENCY POSITION
The exchange rate of the Mexican peso to the U.S. dollar at December 31, 1997 and 1996 was $8.07 and $7.88,
respectively. At January 19, 1998, the exchange rate is $8.24 pesos.