Page 123 - Martin Marietta - 2024 Proxy Statement

NOTES TO FINANCIAL STATEMENTS (Continued)
Environmental Matters. The Company records a liabilityfor an asset retirement obligation at fairvalue in the period in which it is
incurred. The asset retirement obligation is recorded at the acquisition date of a long‐lived tangible asset if the fair value can be
reasonably estimated. A corresponding amount is capitalized as part of the asset’s carrying amount. The fairvalue is affected by
management’s assumptions regarding the scope of the work, inflation rates and asset retirement dates.
Further, the Company records an accrual for other environmental remediation liabilities in the period in which it is probable that
a liability has been incurred and the appropriate amounts can be estimated reasonably. Such accruals are adjusted as further
information develops or circumstances change. Generally, these costs are not discounted to their present value or offset for
potential insurance or other claims or potential gains fromfuture alternative uses for a site.
Income Taxes. Deferred income taxes, net, on the consolidated balance sheets reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes, and the percentage depletion allowed for tax purposes. Deferred tax liabilities for property, plant and equipment result
from accelerated depreciation methods being used for income tax purposes as compared with the straight‐line method for
financial reporting purposes. Deferred tax liabilities related to goodwill and other intangibles reflect the cessation of goodwill
amortization for financial reporting purposes, while amortization continued for income tax purposes. The effect of changes in
enacted tax rates on deferred income tax assets and liabilities is charged or credited to income tax expense in the period of
enactment.
The Company applies the proportional amortization method to equity investments in tax credit programs that meet the following
specified criteria: it is probable that the income tax credits allocable to the Company will be available; the Company does not have
the ability to exercise significant influence over the operating and financial policies of the underlying project; substantially all of
the projected benefits are from income tax credits and other income tax benefits, as determined on a discounted basis; the
Company's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive;
and the Company is a limited liability investor in the limited liability entity for both legal and tax purposes and its liability is limited
to its capital investment. Under the proportional amortization method, the equity investment is amortized in proportion to the
income tax credits and other income tax benefits received, with the amortization expense and the income tax benefits presented
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on a net basis in Income tax expense or benefit on the consolidated statements of earnings.
Uncertain Tax Positions. The Company recognizes a tax benefit when it is more‐likely‐than‐not, based on the technical merits, that
a tax position would be sustained upon examination by a taxing authority. The amount to be recognized is measured as the largest
amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority that has
full knowledge of all relevant information. The Company’s unrecognized tax benefits are recorded in other liabilities on the
consolidated balance sheets or as an offset to the deferred tax asset for tax carryforwards where available.
The Company records interest accrued in relation to unrecognized tax benefits as income tax expense. Penalties, ifincurred, are
recorded as operating expenses in the consolidated statements of earnings.
Sales Taxes. The Company is deemed to be an agent when collecting sales taxes from customers. Sales taxes collected from
customers are recorded as liabilities until remitted to taxing authorities and therefore are not reflected in the consolidated
statements of earnings as revenues and expenses.
Start‐Up Costs. Noncapital start‐up costs for new facilities and products are charged to operations as incurred.
Consolidated Comprehensive Earnings and Accumulated Other Comprehensive Loss. Consolidated comprehensive earnings
consist of consolidated net earnings, adjustments for the funded status of pension and postretirement benefit plans and foreign
currency translation adjustments, and are presented in the Company’s consolidated statements of comprehensive earnings.

Accumulated other comprehensive loss consists of unrecognized gains and losses related to the funded status of the pension and
postretirement benefit plans and foreign currency translation and is presented on the Company’s consolidated balance sheets.

23 Annual Report ♦ Page 21