Cemex 2013 Annual Report Download - page 53

Notes to the consolidated financial statements
2E) Cash and cash equivalents (note 8)
The balance in this caption is comprised of available amounts of cash and cash equivalents, mainly represented by highly-liquid short-
terminvestments,whichareeasilyconvertibleintocash,andwhicharenotsubjecttosignicantrisksofchangesintheirvalues,including
overnightinvestments,whichyieldxedreturnsandhavematuritiesoflessthanthreemonthsfromtheinvestmentdate.Thesexed-income
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nancialincome(expense),net.
Theamountofcashandcashequivalentsinthebalancesheetincludesrestrictedcashandinvestments,comprisedofdepositsinmargin
accountsthatguaranteeseveralofCEMEX’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investmentsareoffsetagainsttheliabilitiesthatCEMEXhaswithitscounterparties.
2F) Trade accounts receivable and other current accounts receivable (notes 9, 10)
According to IAS 39,
Financial instruments: recognition and measurement  (“IAS 39”), items under this caption are classied as “loans
andreceivables,”withnoexplicitcost,whicharerecordedattheiramortizedcost,whichisrepresentedbythenetpresentvalueofthe
considerationreceivableorpayableasofthetransactiondate.Duetotheirshort-termnature,CEMEXinitiallyrecognizesthesereceivablesat
theoriginalinvoicedamountlessanestimateofdoubtfulaccounts.Allowancesfordoubtfulaccountsaswellasimpairmentofothercurrent
accountsreceivablearerecognizedagainstadministrativeandsellingexpenses.
Tradereceivablessoldundersecuritizationprograms,inwhichCEMEXmaintainsaresidualinterestinthetradeaccountsreceivablesoldincase
ofrecoveryfailure,aswellascontinuedinvolvementinsuchassets,donotqualifyforderecognitionandaremaintainedonthebalancesheet.
2G) Inventories (note 11)
Inventoriesarevaluedusingthelowerofcostandnetrealizablevalue.Thecostofinventoriesincludesexpendituresincurredinacquiringthe
inventories,productionorconversioncostsandothercostsincurredinbringingthemtotheirexistinglocationandcondition.CEMEXanalyzes
itsinventorybalancestodetermine if,as aresultof internalevents, suchasphysicaldamage, orexternalevents, suchastechnological
changesormarketconditions,certainportionsofsuchbalanceshavebecomeobsoleteorimpaired.Whenanimpairmentsituationarises,the
inventorybalanceisadjustedtoitsnetrealizablevalue,whereas,ifanobsolescencesituationoccurs,theinventoryobsolescencereserveis
increased.Inbothcases,theseadjustmentsarerecognizedagainsttheresultsfortheperiod.Advancestosuppliersofinventoryarepresented
aspartofothershort-termaccountsreceivable.
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classied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nancialincome(expenses),net.
Investmentsinnancialinstrumentsheldfortrading,aswellasthoseinvestmentsavailableforsale,classiedunderIAS39,arerecognized
attheirestimatedfairvalue,intherstcasethroughthestatementsofoperationsaspartofothernancial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reclassiedtoothernancialincome(expenses),netinthe
statementsofoperations.Theseinvestmentsaretestedforimpairmentupontheoccurrenceofasignicant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.Depreciationofxed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.
[52]