This excerpt taken from the AMX 20-F filed Jun 30, 2005.
y) Recent pronouncements
Business Combinations - In May 2004, the MIPA issued Mexican accounting Bulletin B-7, Business Combinations, the observance of which is compulsory for fiscal years beginning on or after January 1, 2005. Among other things, Bulletin B-7:
Adoption of this new accounting pronouncement will increase the Companys net income by approximately P. 1,100 million in 2005, derived from the non-amortization of goodwill.
Financial instruments - In April 2004, the MIPA amended Mexican accounting Bulletin C-2, Financial Instruments. The amendments establish that changes in the fair value of instruments classified as available for sale be recognized in stockholders equity until such instruments are sold, thereby modifying the rules of Bulletin C-2. The amended Bulletin C-2 also provides requirements and rules for the accounting treatment of transfers between financial asset categories. The amendments are also more precise in establishing the guidelines for the accounting treatment to be given to impairment in the fair value of financial instruments. Furthermore, the amended bulletin requires that such instruments be classified as either short-term or long-term and clarifies the rules for presenting in the statement of changes in financial position changes associated with the purchase, sale and maturity of financial instruments. Finally, the amendments broaden the disclosure rules established under Bulletin C-2.
The observance of the amendments to Bulletin C-2 is compulsory for fiscal years beginning on or after January 1, 2005, although earlier observance is permitted. Management does not believe the adoption of this new accounting requirement will have a material effect on the Companys financial position or on its results of operations.
Accounting for derivative instruments and hedging activities - In April 2004, the MIPA issued Bulletin C-10, Accounting for Derivative Instruments and Hedging Activities. Bulletin C-10 establishes the defining characteristics that financial instruments must have to be considered derivatives, as well as the conditions that must be met for specifically designating derivatives as hedges. Bulletin C-10 also provides guidelines for assessing the effectiveness of hedging derivatives and the rules for their valuation and the accounting for changes in their fair value. Finally, this bulletin provides guidelines for disclosing and presenting hedges in the financial statements. Management does not believe the adoption of this new accounting requirement will have a material effect on the Companys financial position or on its results of operations.
Labor obligations - In January 2004, the MIPA issued a revised version of accounting Bulletin D-3, Labor Obligations. The revised bulletin establishes the overall rules for the valuation, presentation and disclosure of so-called other post-retirement benefits and the reduction and early extinguishment of such benefits, thus nullifying the provisions of Circular 50. Bulletin D-3 also provides rules applicable to employee termination pay.
The observance of these new rules is compulsory for fiscal years beginning on or after January 1, 2005. Management does not believe the adoption of this new accounting requirement will have a material effect on the Companys financial position or on its results of operations.