Chrysler 2007 Annual Report Download - page 102

Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 101
In connection with the requirements of the Consob Resolution
No. 15519 of July 27, 2006 as to the format of the financial
statements, specific supplementary Income Statement, Balance
Sheet and Consolidated Statement of Cash Flows formats have
been added for related party transactions so as not to
compromise an overall reading of the statements.
Basis of consolidation
Subsidiaries
Subsidiaries are enterprises controlled by the Group, as
defined in IAS 27 –
Consolidated and Separate Financial
Statements
. Control exists when the Group has the power,
directly or indirectly, to govern the financial and operating
policies of an enterprise so as to obtain benefits from its
activities. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that
control commences until the date that control ceases. The
equity and net result attributable to minority stockholders’
interests are shown separately in the consolidated balance
sheet and income statement, respectively. When losses in a
consolidated subsidiary pertaining to the minority exceed the
minority interest in the subsidiary’s equity, the excess is
charged against the Group’s interest, unless the minority
stockholders have a binding obligation to reimburse the losses
and are able to make an additional investment to cover the
losses, in which case the excess is recorded as an asset in the
consolidated financial statements. If no such obligation exists,
should profits be realised in the future, the minority interests’
share of those profits is attributed to the Group, up to the
amount necessary to recover the losses previously absorbed
by the Group.
Subsidiaries that are either dormant or generate a negligible
volume of business, are not consolidated. Their impact on the
Group’s assets, liabilities, financial position and earnings is
immaterial.
Jointly controlled entities
Jointly controlled entities are enterprises over whose activities
the Group has joint control, as defined in IAS 31 –
Interests in
Joint Ventures
. The consolidated financial statements include
the Group’s share of the earnings of jointly controlled entities
using the equity method, from the date that joint control
commences until the date that joint control ceases.
Associates
Associates are enterprises over which the Group has significant
influence, but no control or joint control, over the financial and
operating policies, as defined in IAS 28 –
Investments in
Associates
. The consolidated financial statements include the
Group’s share of the earnings of associates using the equity
method, from the date that significant influence commences
until the date that significant influence ceases. When the
Group’s share of losses of an associate, if any, exceeds the
carrying amount of the associate in the Group’s balance sheet,
the carrying amount is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group has
incurred obligations in respect of the associate.
Investments in other companies
Investments in other companies that are available-for-sale
financial assets are measured at fair value, when this can be
reliably determined. Gains or losses arising from changes in
fair value are recognised directly in equity until the assets are
sold or are impaired, when the cumulative gains and losses
previously recognised in equity are recognised in the income
statement of the period.
Investments in other companies for which fair value is not
available are stated at cost less any impairment losses.
Dividends received from these investments are included in
Other income (expenses) from investments.
Transactions eliminated on consolidation
All significant intragroup balances and transactions and any
unrealised gains and losses arising from intragroup
transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains and losses arising from
transactions with associates and jointly controlled entities are
eliminated to the extent of the Group’s interest in those
entities.
Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign
exchange rate prevailing at the date of the transaction.