Chrysler 2007 Annual Report Download - page 253

Fiat S.p.A. Financial Statements at December 31, 2007 - Notes to the Financial Statements252
The Statement of Cash Flows has been prepared using the
indirect method.
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 Statement of Cash Flows formats have been added
for related party transactions, so as not to compromise an
overall reading of the statements.
Intangible assets
Purchased or internally-generated intangible assets are recognised
as assets in accordance with IAS 38 -
Intangible Assets , where
it is probable that the use of the asset will generate future
economic benefits and where the cost of the asset can be
determined reliably.
Intangible assets with finite useful lives are measured at
purchase or manufacturing cost, net of amortisation charged
on a straight-line basis over their estimated useful lives and
net of any impairment losses.
Property, plant and equipment
Cost
Property, plant and equipment is measured at purchase or
manufacturing cost, net of accumulated depreciation and any
impairment losses, and is not revalued.
Subsequent expenditures are capitalised only if they increase
the future economic benefits embodied in the asset to which
they relate. All other expenditures are expensed as incurred.
Assets are depreciated using the policies and rates described
below.
Lease arrangements in which the lessor maintains substantially
all the risks and rewards incidental to the ownership of an
asset are classified as operating leases. Lease payments under
an operating lease are recognised as an expense on a straight-
line basis over the lease term.
Depreciation
Depreciation is charged on a straight-line basis over the
estimated useful lives of assets as follows:
Annual depreciation rate
Buildings 3%
Plant 10%
Furniture 12%
Fixtures 20%
Vehicles 25%
Land is not depreciated.
Impairment of assets
The company reviews at least annually the recoverability of the
carrying amount of intangible assets, property, plant and
equipment and investments in subsidiaries and associated
companies, in order to determine whether there is any
indication that those assets have suffered an impairment loss.
If any such indication exists, the carrying amount of an asset is
written down to its recoverable amount.
The recoverable amount of an asset is the higher of fair value
less costs to sell and its value in use.
In particular, in assessing whether investments in subsidiaries
and associated companies have been impaired, their recoverable
amount has been taken as their value in use, as the investments
are not listed and a market value (fair value less costs to sell)
cannot be reliably measured. The value in use of an investment
is determined by estimating the present value of the estimated
cash flows expected to arise from the results of the investment
and from the estimated value of its ultimate disposal, in line
with the requirements of paragraph 33 of IAS 28.
When an impairment loss on assets subsequently reverses or
decreases, the carrying amount of the asset is increased up to
the revised estimate of its recoverable amount, but not in
excess of the carrying amount that would have been
recognised had no impairment loss been recorded. The
reversal of an impairment loss is recognised immediately in
income.