Cemex 2012 Annual Report Download - page 54

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Notes to the
consolidated
financial
statements
54
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Retained earnings (note 20C)
Retained earnings represent the cumulative net results of prior accounting periods, net of dividends declared to stockholders,
and net of any recapitalizations of retained earnings. In addition, retained earnings also include the effects generated from initial
adoption of IFRS as of January 1, 2010 according to IFRS 1.
Non-controlling interest and perpetual debentures (note 20D)
This caption includes the share of non-controlling stockholders in the results and equity of consolidated subsidiaries. This caption
also includes the amount as of the balance sheet date of financial instruments (perpetual notes) issued by consolidated entities
that qualify as equity instruments considering that there is: a) no contractual obligation to deliver cash or another financial asset;
b) no predefined maturity date; and c) a unilateral option to defer interest payments or preferred dividends for indeterminate
periods.
2Q) Revenue recognition (note 3)
CEMEX’s consolidated net sales represent the value, before tax on sales, of revenues originated by products and services sold by
consolidated subsidiaries as a result of their ordinary activities, after the elimination of transactions between related parties, and
are quantified at the fair value of the consideration received or receivable, decreased by any trade discounts or volume rebates
granted to customers.
Revenue from the sale of goods and services is recognized when goods are delivered or services are rendered to customers,
there is no condition or uncertainty implying a reversal thereof, and they have assumed the risk of loss. Revenue from trading
activities, in which CEMEX acquires finished goods from a third party and subsequently sells the goods to another third-party, are
recognized on a gross basis, considering that CEMEX assumes the total risk on the goods purchased, not acting as agent or broker.
Revenue and costs associated with construction contracts are recognized in the period in which the work is performed by
reference to the percentage or stage of completion of the contract at the end of the period, considering that the following have
been defined: a) each party’s enforceable rights regarding the asset to be constructed; b) the consideration to be exchanged; c)
the manner and terms of settlement; d) actual costs incurred and contract costs required to complete the asset are effectively
controlled; and e) it is probable that the economic benefits associated with the contract will flow to the entity.
The percentage of completion of construction contracts represents the proportion that contract costs incurred for work performed
to date bear to the estimated total contract costs or the surveys of work performed or the physical proportion of the contract
work completed, whichever better reflects the percentage of completion under the specific circumstances. Progress payments
and advances received from customers do not reflect the work performed and are recognized as a short or long term advanced
payments, as appropriate.
2R) Cost of sales, administrative and selling expenses and distribution expenses
Cost of sales represents the production cost of inventories at the moment of sale. Such cost of sales includes depreciation,
amortization and depletion of assets involved in production and expenses related to storage in production plants. Cost of sales
excludes expenses related to personnel, equipment and services involved in sale activities and storage of product at points of
sales, which are included as part of the administrative and selling expenses. Cost of sales includes freight expenses of raw material
in plants and delivery expenses of CEMEX’s ready-mix concrete business, but excludes freight expenses of finished products
between plants and points of sale and freight expenses between points of sales and the customers’ facilities, which are included
as part of the distribution expenses line item. For the years ended December 31, 2012, 2011 and 2010, selling expenses included
as part of the selling and administrative expenses line item amounted to $7,946, $8,079 and $7,858, respectively.