Chrysler 2004 Annual Report Download - page 51
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49
the receivables retained by the seller is therefore limited to
the junior securities it has subscribed for.
Factoring transactions may be with or without recourse on
the seller; certain factoring agreements without recourse include
deferred purchase price clauses (i.e. the payment of a minority
portion of the purchase price is conditional upon the full
collection of the receivables), require a first loss guarantee
of the seller up to a limited amount or imply a continuing
significant exposure to the receivables cash flow.
According to Italian GAAP, all receivables sold through either
securitization or factoring transactions (both with and without
recourse) have been derecognized. Furthermore, with specific
reference to the securitization of retail loans and leases
originated by the financial services companies, the net present
value of the interest flow implicit in the installments, net of
related costs, has been recognized in the income statement.
Under IFRS:
■As mentioned above, SIC 12 Special Purpose Entities stated
that an SPE shall be consolidated when the substance of the
relationship between the entity and the SPE indicates that the
SPE is controlled by that entity: all securitization transactions
will be therefore reversed, because the subscription of the
junior asset-backed securities by the seller entails its control
in substance over the SPE.
■IAS 39 allows for the derecognition of a financial asset when,
and only when, the risks and rewards of the ownership of the
assets are substantially transferred: consequently, all portfolios
sold with recourse, and the majority of those sold without
recourse, since risks and rewards have not been substantially
transferred, will be reinstated in the IFRS balance sheet.
The impact of such adjustments on the stockholders’ equity
and on the net income will be not material.
R. ACCOUNTING FOR DEFERRED INCOME TAXES
This adjustment will include the combined effect of the net
deferred tax effects, after allowance, on the above mentioned
IFRS adjustments, as well as other minor differences between
Italian GAAP and IFRS on the recognition of tax assets and
liabilities.
Transition to International Financial Reporting Standards (IAS/IFRS)