building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
(b) Goodwill<br />
CEMEX, S.A.B. DE C.V. AND SUBSIDIARIES<br />
Notes to the Consolidated Financial Statements – (Continued)<br />
As of December 31, 2010, 2009 and 2008<br />
(Millions of Mexican pesos)<br />
Goodwill recognized under MFRS (note 11) has been adjusted under U.S. GAAP for: (i) the effect on goodwill from the U.S. GAAP<br />
adjustments as of the acquisition dates; (ii) beginning January 1, 2002, goodwill is not amortized under U.S. GAAP, while under MFRS<br />
goodwill was amortized until December 31, 2004; and (iii) until December 31, 2003, goodwill under MFRS was carried in the functional<br />
currencies of the holding companies for the reporting units, was translated into pesos and was then restated based on the Mexican inflation,<br />
while under U.S. GAAP, goodwill is carried in the functional currencies of the reporting units, and is restated, when inflationary accounting is<br />
applicable under MFRS, by the inflation factor of the reporting unit's country, and is translated into Mexican pesos at the exchange rates<br />
prevailing at the reporting date. Goodwill generated beginning January 1, 2005 under MFRS is carried consistently with the treatment of<br />
goodwill under U.S. GAAP.<br />
The reconciliation of goodwill under MFRS and U.S. GAAP for the years ended December 31, 2010, 2009 and 2008 is as follows:<br />
2010 2009 2008<br />
Goodwill under MFRS..................................................................................... Ps 142,094 150,827 157,541<br />
Cumulative U.S. GAAP adjustments............................................................... (27,193) (27,760) (31,502)<br />
Goodwill under U.S. GAAP ............................................................................ 114,901 123,067 126,039<br />
U.S. GAAP adjustments:<br />
Cumulative U.S. GAAP adjustments at beginning of year .............................. (27,760) (31,502) 11,675<br />
Foreign exchange results and inflation effects............................................. 567 2,813 2,721<br />
Impairment charges (see note 24(j))............................................................ – 929 (45,898)<br />
Cumulative U.S. GAAP adjustments at end of year ........................................ Ps (27,193) (27,760) (31,502)<br />
The accumulated impairment losses as of Decemeber 31, 2010 amounts approximately Ps46,150.<br />
(c) Income Taxes and Employees' Statutory Profit Sharing<br />
Deferred Income Taxes<br />
Under MFRS, CEMEX determines deferred income taxes in a manner similar to U.S. GAAP (note 15B). Nonetheless, there are specific<br />
differences as compared to the calculation under ASC 740, Income Taxes (“ASC 740”), resulting in adjustments in the reconciliation to U.S.<br />
GAAP. These differences mainly arise from: (i) the recognition of the accumulated initial effect of the asset and liability method under MFRS<br />
did not consider the deferred tax consequences of business combinations made before January 1, 2000; and (ii) the effects of deferred tax on<br />
the reconciling items between MFRS and U.S. GAAP. The tax effects of temporary differences that give rise to significant portions of the<br />
deferred tax assets and deferred tax liabilities under U.S. GAAP at December 31, 2010 and 2009 are presented below:<br />
2010 2009<br />
Deferred tax assets:<br />
Tax loss and tax credits carryforwards......................................................................................... Ps 73,843 77,602<br />
Accounts payable and accrued expenses...................................................................................... 8,206 8,487<br />
Others........................................................................................................................................... 13,302 3,364<br />
Total gross deferred tax assets ..................................................................................................... 95,351 89,453<br />
Less valuation allowance ............................................................................................................. (40,137) (32,079)<br />
Total deferred tax assets under U.S. GAAP ............................................................................. 55,214 57,374<br />
Deferred tax liabilities:<br />
Property, machinery and equipment............................................................................................. (42,740) (48,198)<br />
Others........................................................................................................................................... (4,882) (4,571)<br />
Total deferred tax liability under U.S. GAAP .......................................................................... (47,622) (52,769)<br />
Net deferred tax asset under U.S. GAAP ..................................................................................... Ps 7,592 4,605<br />
Under U.S. GAAP, tax effects of intra-group transactions where the related assets remain in the consolidated balance sheet should be<br />
eliminated in consolidation until the time at which the asset is sold outside the group. Under MFRS, the tax effects recognized by each<br />
subsidiary as part of such intra-group sale of assets are not reversed. During 2008 (note 24(k)), in connection with an intra-group transfer of<br />
intangible assets, a deferred tax asset recognized by the buyer under MFRS in the amount of Ps2,206 was eliminated for U.S. GAAP<br />
purposes. The carrying amount of such deferred tax asset under MFRS as of December 31, 2010 and 2009 was Ps2,343 and Ps1,986,<br />
respectively. During 2010, the estimated useful life of the asset was revised, considering a non-significant change in estimation which was<br />
accounted for prospectively. As of December 31, 2010 and 2009, the deferred income tax benefit and expense recorded under MFRS, which was<br />
reversed for U.S. GAAP purposes was Ps83 and Ps220, respectively.<br />
F-65