Cemex 2013 Annual Report Download - page 61

Notes to the consolidated financial statements
Retained earnings (note 20C)
Retained earnings represent the cumulative net results of prior accounting periods, net of: a) dividends declared to stockholders; b)
recapitalizationsofretainedearnings;c)theeffectsgeneratedforminitialadoptionofIFRSasofJanuary1,2010accordingtoIFRS1;andd)
whenapplicable,therestitutionofretainedearningsfromotherlineitemswithinstockholder´sequity.
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nominalamountasofthebalancesheetdateofnancial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nancialasset;b)nopredened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quantied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nished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dened: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
benetsassociatedwiththecontractwillow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reectsthepercentageofcompletionunderthespeciccircumstances.Progresspaymentsandadvancesreceivedfrom
customersdonotreect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nished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,2013,2012and2011,sellingexpensesincludedaspartofthesellingandadministrativeexpenseslineitemamountedto$8,120,
$7,946and$8,079,respectively.
2S) Executive stock-based compensation (note 21)
BasedonIFRS2,
Share-basedpayments (“IFRS2”),stockawardsbasedonsharesofCEMEXgrantedtoexecutivesaredenedasequity
instrumentswhenservicesreceivedfromemployeesaresettledbydeliveringCEMEX’sshares;orasliabilityinstrumentswhenCEMEXcommits
tomakecashpaymentstotheexecutivesontheexercisedateoftheawardsbasedonchangesinCEMEX’sownstock(intrinsicvalue).The
costofequityinstrumentsrepresentstheirestimatedfairvalueatthedateofgrantandisrecognizedinthestatementsofoperationsduring
theperiodinwhichtheexerciserightsoftheemployeesbecomevested.Inrespectofliabilityinstruments,theseinstrumentsarevaluedat
theirestimatedfairvalueateachreportingdate,recognizingthechangesinfairvaluethroughtheoperatingresults.CEMEXdeterminesthe
estimatedfairvalueofoptionsusingthebinomialnancialoption-pricingmodel.
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