Cemex 2012 Annual Report Download - page 131

Notes to the
financial
statements
131
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2M) Provisions
CEMEX, S.A.B. de C.V. recognizes provisions when it has a legal or constructive obligation resulting from past events, whose
resolution would imply cash outflows or the delivery of other resources.
Contingencies and commitments (note 14)
Obligations or losses related to contingencies are recognized as liabilities in the balance sheet when present obligations exist
resulting from past events that are expected to result in an outflow of resources and the amount can be measured reliably.
Otherwise, a qualitative disclosure is included in the notes to the financial statements. The effects of long-term commitments
established with third parties, such as supply contracts with suppliers or customers, are recognized in the financial statements
on an incurred or accrued basis, after taking into consideration the substance of the agreements. Relevant commitments are
disclosed in the notes to the financial statements. CEMEX, S.A.B. de C.V. does not recognize contingent revenues, income or assets.
2N) Income taxes (note 12)
Based on IAS 12, Income taxes (“IAS 12”), the effects reflected in the statements of operations for income taxes include the
amounts incurred during the period and the amounts of deferred income taxes, determined according to the income tax law.
The deferred income taxes of CEMEX, S.A.B de C.V. represent the addition of the amounts determined by applying the enacted
statutory income tax rate to the total temporary differences resulting from comparing the book and taxable values of assets and
liabilities, considering tax loss carryforwards as well as other recoverable taxes and tax credits, subject to a recoverability analysis.
Deferred income taxes for the period represent the difference between balances of deferred income at the beginning and the end
of the period. According to IFRS, all items charged or credited directly in stockholders’ equity or as part of other comprehensive
income or loss for the period are recognized net of their current and deferred income tax effects. The effect of a change in enacted
statutory tax rates is recognized in the period in which the change is ocially enacted.
Deferred tax assets are analyzed at each reporting date, and reduced, to the extent that it is deemed not possible to realized
the related benefits. In these analyses, CEMEX, S.A.B. de C.V. analyzes total tax losses included in the income tax returns where
CEMEX, S.A.B. de C.V. believes, based on available evidence, that the tax authorities would not reject; and the likelihood of the
recoverability of such tax loss carryforwards prior to their expiration through an analysis of estimated future taxable income. If
CEMEX, S.A.B. de C.V. believes that it is more-likely-than-not that the tax authorities would reject a self-determined deferred tax
asset, it would decrease such asset. Likewise, if CEMEX, S.A.B. de C.V. believes that it would not be able to use a deferred tax asset
before its expiration, CEMEX, S.A.B. de C.V. does not recognize this asset. Both situations would result in additional income tax
expense for the period in which such determination is made.
In order to determine whether it is more-likely-than-not that deferred tax assets will ultimately be realized, CEMEX, S.A.B. de
C.V. takes into consideration all available positive and negative evidence, including factors such as market conditions, industry
analysis, expansion plans, projected taxable income, carryforward periods, current tax structure, potential changes or adjustments
in tax structure, tax planning strategies, future reversals of existing temporary differences, etc. Likewise, every reporting period,
CEMEX, S.A.B. de C.V. analyzes its actual results versus its estimates, and adjusts, as necessary, its tax asset valuations through
the statement of operations of the period in which such conclusion is reached.
The income tax effects from an uncertain tax position are recognized when it is more-likely-than-not that the position will be
sustained based on its technical merits and assuming that the tax authorities will examine each position and have full knowledge
of all relevant information, and they are measured using a cumulative probability model. Each position has been considered on
its own, regardless of its relation to any other broader tax settlement. The more-likely-than-not threshold represents a positive
assertion by management that CEMEX, S.A.B. de C.V. is entitled to the economic benefits of a tax position. If a tax position is not
considered more-likely-than-not to be sustained, no benefits of the position are recognized. CEMEX, S.A.B. de C.V.’s policy is to
recognize interest and penalties related to unrecognized tax benefits as part of the income tax in the consolidated statements of
operations.
2O) Stockholders’ equity
Common stock and additional paid-in capital (note 13A)
These items represent the value of stockholders’ contributions, and include increases related to the recapitalization of retained
earnings and the recognition of executive compensation programs in CPOs.