Chrysler 2007 Annual Report Download - page 252

Notes to the Financial Statements
Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements 251
Principal activities
Fiat S.p.A. (the “Company”) is a corporation organised under
the laws of the Republic of Italy and is the Parent Company of
the Fiat Group, holding investments, either directly or indirectly
through sub-holdings, in the capital of the parent companies of
business Sectors in which the Fiat Group operates.
The head office of the company is in Turin, Italy.
The financial statements of Fiat S.p.A. are prepared in euros
which is the currency of the economic environment in which
the company operates.
The Balance Sheet and Income Statement are presented in
euros, while the Statement of Cash Flows, the Statement of
Changes in Stockholders’ Equity, the Statement of Total
Recognised Income and Expenses and the amounts stated in
the Notes are presented in thousands of euros, unless
otherwise stated.
As the Parent Company, Fiat S.p.A. has additionally prepared
the consolidated financial statements of the Fiat Group at
December 31, 2007.
Significant accounting policies
Basis of preparation
The 2007 financial statements are the separate financial
statements of the Parent Company, Fiat S.p.A., and have been
prepared in accordance with the International Financial
Reporting Standards (“IFRS”) issued by the International
Accounting Standards Board (“IASB”) and adopted by the
European Union, as well as the provisions issued in
implementation of Article 9 of Legislative Decree no. 38/2005.
The designation “IFRS” also includes all the revised
International Accounting Standards (“IAS”) and all the
interpretations of the International Financial Reporting
Interpretations Committee (“IFRIC”), previously known as the
Standing Interpretations Committee (“SIC”).
In compliance with European Regulation no. 1606 of July 19,
2002, starting from 2005 the Fiat Group has adopted the
International Financial Reporting Standards (“IFRS”) issued by
the International Accounting Standards Board (“IASB”) for the
preparation of its consolidated financial statements. On the
basis of national legislation implementing that Regulation, the
annual statutory accounts of the Parent Company Fiat S.p.A. as
of December 31, 2006 have been prepared for the first time
also using those accounting standards. The information
required by IFRS 1
First-time Adoption of International
Financial Reporting Standards
relating to the effects of the
transition to IFRS was reported in an Appendix to the statutory
financial statements for the year ended December 31, 2006, to
which reference should be made.
The financial statements have been prepared on a historical
cost basis, modified as required for measuring certain financial
instruments.
Format of the financial statements
Fiat S.p.A. presents an Income Statement using a classification
based on the nature of its revenues and expenses given the
type of business it performs. The Fiat Group presents a
consolidated Income Statement using a classification based on
function, as this is believed to be more representative of the
format selected for managing the business sectors and for
internal reporting purposes and is coherent with international
practice in the automotive sector. Fiat S.p.A. has elected to
present current and non-current assets and liabilities as
separate classifications on the face of the Balance Sheet. A
mixed format has been selected by the Fiat Group for the
consolidated Balance Sheet, as permitted by IAS 1, presenting
only current and non-current assets separately. This decision
has been taken in view of the fact that both companies
carrying out industrial activities and those carrying out
financial services activities are consolidated in the Group’s
financial statements. The investment portfolios of financial
services companies are included in current assets in the
consolidated balance sheet, as the investments will be realised
in their normal operating cycle. Financial services companies,
though, obtain funds only partially from the market: the
remaining are obtained through the Group’s treasury
companies (included in industrial companies), which lend
funds both to industrial Group companies and to financial
services companies as the need arises.
This financial service structure within the Group means that
any attempt to separate current and non-current debt in the
consolidated Balance Sheet cannot be meaningful. This has no
effect on the presentation of the liabilities of Fiat S.p.A.