FORM 20-F Grupo Casa Saba, S.A.B. de C.V.

Table of Contents
Effective 2011, the Group adopted retrospectively the new Mexican FRS C-5, “Prepaid expenses” that supersedes the Bulletin with the same name. Accordingly, prepaid expenses are
presented as a current asset when the period in which their benefits are expected to be obtained is equal to or less than one year. Prepaid expenses for goods are presented in the shortterm
or long-term, depending on the classification of the item intended (e.g.: inventory or property and equipment). That adoption had no impact on the consolidated financial
statements.
i) Financial instruments
The carrying value of all financial assets and financial liabilities that is derived from any type of financial instrument is assessed at its estimated fair value and it is recognized in the
balance sheet. The valuation effect, as well as costs and returns generated by financial instruments, form part of the comprehensive gain or loss on financing when incurred or earned.
At December 31, 2011 and 2010, the carrying value of financial instruments (cash, receivables, other accounts receivable, trade accounts payable, other payables and accrued liabilities,
as well as short-term debt) approximates their estimated fair value due to their short-term nature. The valuation of the long-term debt incurred through bank loans and market bonds
considers estimated values for financial instruments with similar terms and due dates existing on the market, which accrue variable financing rates in effect on the market.
j) Derivative financial instruments
These transactions are contracted to significantly hedge the associated risks with changes in interest rate, exchange rate or inflation. The designation of hedges is documented by
describing the strategy and objective of management of risks, hedged risks, identification of the hedged primary position, its accounting recognition, and how its effectiveness is
measured. Management estimates that the changes in cash flows of the derivative financial instrument maintain high effectiveness in offsetting the changes in cash flows of the
primary position, both at the beginning and throughout the relationship of the designated hedge.
The assets and liabilities that apply to derivative financial instruments are presented in the balance sheet at their estimated fair value determined based on exchange rate quotes
recognized on the market. The effective portion of gains or losses on the cash flow hedging financial instrument is recognized temporarily in the comprehensive income account in
stockholders’ equity, and it is subsequently reclassified to income as the amount of the hedge is exercised.
k) Allowance for doubtful accounts
The allowance for doubtful accounts represents the Group’s estimate of the probable loss in all trade receivables by considering the historical trend of payment performance of
customers and factors surrounding the specific credit risk.
l) Inventories
Inventories are valued at the lower of acquisition cost or net realizable value. During high inflationary periods, inventories are restated by using NCPI factors, by considering Mexican
FRS B-10. The Group analyzes its inventory balances to determine if any portion of their balance requires the need for an adjustment to the allowance or if it should be increased, due to
the occurrence of adverse events such as physical damage, obsolescence, expiration, etc. The cost of sales represents the inventories acquisition cost in a non-inflationary
environment.
Effective 2011, the Group adopted retrospectively the new FRS C-4, “Inventories”. This standard supersedes the Bulletin with the same name. That adoption had no impact on the
consolidated financial statements.
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