Cemex 2012 Annual Report Download - page 128

Notes to the
financial
statements
128
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2E) Cash and cash equivalents (note 5)
The balance in this caption is comprised of available amounts of cash and cash equivalents, mainly represented by short-term
investments of high liquidity, which are easily convertible into cash, and which are not subject to significant risks for changes in
their values, including overnight investments which yield fixed returns and have maturities of less than three months from the
investment date. Interest-accruing investments are recorded at cost plus accrued interest. Other investments which are easily
convertible into cash are recorded at their market value. Gains or losses resulting from changes in market values and accrued
interest are included in the statements of operations as part of other financing cost, net.
The amount of cash and cash equivalents in the balance sheet includes restricted cash and investments, comprised by deposits
in margin accounts that guarantee several of CEMEX, S.A.B. de C.V.’s obligations, to the extent that the restriction will be lifted in
less than three months from the balance sheet date. When the restriction period is greater than three months, such restricted cash
and investments are not considered cash equivalents and are included within short-term or long-term “Other accounts receivable,”
as appropriate. When contracts contain provisions for net settlement, these restricted amounts of cash and cash equivalents are
offset against the liabilities that CEMEX, S.A.B. de C.V. has with its counterparts.
2F) Other short-term accounts receivable (note 6)
According to IAS 39, Financial instruments: recognition and measurement (“IAS 39”), items under this caption classified as “loans
and receivables,” are recorded at their amortized cost, which is represented by their net present value as of the transaction date.
Due to their short-term nature, CEMEX S.A.B. de C.V. initially recognizes these receivables at the original invoiced amount.
2G) Investments in subsdiaries and associates (note 7A)
According to IAS 27, Consolidated and separate nancial statements (“IAS 27”), investments in controlled entities and associates,
which are not classified as held for sale, are measured using the cost method.
2H) Other investments and non-current receivables (note 7B)
As part of the category of “loans and receivables” under IAS 39, non-current accounts receivable, as well as investments classified
as held to maturity are initially recognized at their amortized cost. Subsequent changes in net present value are recognized in the
statements of operations as part of other financial income, net.
Investments in financial instruments held for trading, as well as those investments available for sale, classified under IAS 39, are
recognized at their estimated fair value, in the first case through the statements of operations as part of other financial income,
net, and in the second case, changes in valuation are recognized as part of other comprehensive loss of the period within other
equity reserves until their disposition, moment in which all valuation effects accrued in equity are reclassified to other financial
income, net in the statements of operations. These investments are tested for impairment upon the occurrence of a significant
adverse change or at least once a year during the last quarter.
2I) Land and buildings (note 8)
Land and buildings are recognized at acquisition or construction cost, as applicable, less accumulated depreciation and accumulated
impairment losses. Depreciation of buildings is recognized as part of operating expenses and is calculated using the straight-
line method over the estimated useful lives of the assets. As of December 31, 2012, the maximum average useful lives of
administrative buildings were 33 years.
2J) Goodwill
Business acquisitions are recognized using the purchase method, by allocating the consideration transferred to assume control
of the entity to all assets acquired and liabilities assumed, based on their estimated fair values as of the acquisition date. Any
unallocated portion of the purchase price represents goodwill, which is not amortized and is subject to periodic impairment tests
(note 2K). Goodwill can be adjusted for any correction to the preliminary assessment given to the assets acquired and/or liabilities
assumed within the twelve-month period after purchase. Costs associated with the acquisition are expensed in the statements of
operations as incurred.