Cemex 2012 Annual Report Download - page 47

Notes to the
consolidated
financial
statements
47
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2H) Other investments and non-current receivables (note 13B)
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 (expenses), 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
(expenses), net, and in the second case, changes in valuation are recognized as part of other comprehensive income (loss) of the
period within other equity reserves until their time of disposition, when all valuation effects accrued in equity are reclassified to
other financial income (expenses), 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) Property, machinery and equipment (note 14)
Property, machinery and equipment are recognized at their acquisition or construction cost, as applicable, less accumulated
depreciation and accumulated impairment losses. In its opening balance sheet under IFRS as of January 1, 2010, CEMEX elected
to determine the deemed cost of several items of its property, machinery and equipment at their estimated fair value at the date
of transition, including land, mineral reserves and major equipment. In general, CEMEX maintained the same carrying amount that
vehicles, oce equipment and other minor assets had under MFRS at the date of transition to IFRS.
Depreciation of fixed assets is recognized as part of cost and operating expenses (note 5), and is calculated using the straight-line
method over the estimated useful lives of the assets, except for mineral reserves, which are depleted using the units-of-production
method. As of December 31, 2012, the maximum average useful lives by category of fixed assets were as follows:
Years
Administrative buildings 36
Industrial buildings 34
Machinery and equipment in plant 19
Ready-mix trucks and motor vehicles 8
Oce equipment and other assets 6
CEMEX capitalizes, as part of the historical cost of fixed assets, interest expense arising from existing debt during the construction
or installation period of significant fixed assets, considering CEMEX’s corporate average interest rate and the average balance of
investments in process for the period. Initial stripping costs incurred to gain access to the mineral reserves of a determined quarry
are capitalized and amortized during the useful life of the quarry based on the estimated tons of material to be extracted. Ongoing
stripping costs in the same quarry are expensed as incurred.
Costs incurred in respect of operating fixed assets that result in future economic benefits, such as an extension in their useful
lives, an increase in their production capacity or in safety, as well as those costs incurred to mitigate or prevent environmental
damage, are capitalized as part of the carrying amount of the related assets. The capitalized costs are depreciated over the
remaining useful lives of such fixed assets. Other costs, including periodic maintenance on fixed assets, are expensed as incurred.
Advances to suppliers of fixed assets are presented as part of other long-term accounts receivable.
2J) Business combinations, goodwill, other intangible assets and deferred charges (note 15)
Business combinations 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. Intangible
assets acquired are identified and recognized at fair value. 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. As permitted by IFRS 1, CEMEX
elected not to revisit business combinations incurred before the date of transition to IFRS as of January 1, 2010.