Chrysler 2005 Annual Report Download - page 85

84 Fiat Group Consolidated Financial Statements at December 31, 2005 - N otes to the Consolidated Financial Statements
02 Fiat Group
has decreased, the carrying amount of the asset or cash-generating
unit is increased to the revised estimate of its recoverable
amount, but not in excess of the carrying amount that would have
been recorded had no impairment loss been recognised.A reversal
of an impairment loss is recognised in the income statement
immediately.
Financial instruments
Presentation
Financial instruments held by the Group are presented in the financial
statements as described in the following paragraphs.
Investments and other non-current financial assets comprise
investments in non-consolidated companies and other non-current
financial assets (held-to-maturity securities, non-current loans and
receivables and other non-current available-for-sale financial assets).
Current financial assets include trade receivables, receivables from
financing activities (retail financing, dealer financing, lease financing
and other current loans to third parties), current securities, and
other current financial assets (which include derivative financial
instruments stated at fair value as assets), as well as cash and cash
equivalents.
In particular, Cash and cash equivalents include cash at banks, units in
liquidity funds and other money market securities that are readily
convertible into cash and are subject to an insignificant risk of
changes in value. Current securities include short-term or marketable
securities which represent temporary investments of available funds
and do not satisfy the requirements for being classified as cash
equivalents; current securities include both available-for-sale and held
for trading securities.
Financial liabilities refer to debt, which includes asset-backed
financing, and other financial liabilities (which include derivative
financial instruments stated at fair value as liabilities), trade payables
and other payables.
M easurement
Investments in unconsolidated companies classified as non-current
financial assets are accounted for as described in the section Basis
of consolidation.
N on-current financial assets other than equity investments, as well
as current financial assets and financial liabilities, are accounted for
in accordance with IAS 39 - Financial Instruments: Recognition
and M easurement.
Current financial assets and held-to-maturity securities are recognised
on the basis of the settlement date and, on initial recognition, are
measured at acquisition cost, including transaction costs.
Subsequent to initial recognition, available-for-sale and held for
trading financial assets are measured at fair value.W hen market
prices are not available, the fair value of available-for-sale financial
assets is measured using appropriate valuation techniques e.g.
discounted cash flow analysis based on market information available
at the balance sheet date.
Gains and losses on available-for-sale financial assets are recognised
directly in equity until the financial asset is disposed or is determined
to be impaired, at which time the cumulative gains or losses, including
that previously recognised in equity, are included in the income
statement for the period. Gains and losses arising from changes in fair
value of held for trading financial instruments are included in the
income statement for the period.
Loans and receivables which are not held by the Group for trading
(originated loans and receivables), held-to-maturity securities and all
financial assets for which published price quotations in an active
market are not available and whose fair value cannot be determined
reliably, are measured, to the extent that they have a fixed term, at
amortised cost, using the effective interest method.W hen the
financial assets do not have a fixed term, they are measured at
acquisition cost. Receivables with maturities of over one year which
bear no interest or an interest rate significantly lower than market
rates, are discounted using market rates.
Assessments are made regularly as to whether there is any objective
evidence that a financial asset or group of assets may be impaired.
If any such evidence exists, an impairment loss is included in the
income statement for the period.
Except for derivative instruments, financial liabilities are measured at
amortised cost using the effective interest method. Financial liabilities
hedged by derivative instruments are measured in accordance with
hedge accounting principles applicable to fair value hedges: gains and
losses arising from remeasurement at fair value, due to changes in