Chrysler 2008 Annual Report Download - page 121

Fiat Group Consolidated Financial Statements at 31 December 2008120
though, that future significant changes in the yields of
corporate bonds may lead to effects on liabilities and
unrecognised actuarial gains and losses, taking into account
however any simultaneous changes in the returns of plan
assets where these may exist.
Realisation of deferred tax assets arising from tax loss
carryforwards
As of 31 December 2008, the Group had gross deferred tax
assets arising from tax loss carryforwards of €3,679 million
and valuation allowances against these assets of €2,448
million. The corresponding totals at 31 December 2007 were
€4,431 million and €3,234 million, respectively. Management
has recorded these valuation allowances to reduce deferred
tax assets to the amount that it believes it is probable will be
recovered. In making these adjustments, management has
taken into consideration figures from budgets and plans
consistent with those used for impairment testing and
discussed in the preceding paragraph relating to the
recoverable amount of non-current assets. Moreover,
the adjustments that have been recognised are considered
to be sufficient to protect against the risk of a further
deterioration of the assumptions in the plan, taking account
of the fact that the net deferred assets accordingly recognised
relate to temporary differences and tax losses which, to a
significant extent, may be recovered over a very long period,
and are therefore consistent with a situation in which the time
needed to exit from the crisis and for an economic recovery
to occur extends beyond the term implicit in the above-
mentioned plans.
Contingent liabilities
The Group is the subject of legal proceedings and tax issues
covering a range of matters, which are pending in various
jurisdictions. Due to the uncertainty inherent in such matters,
it is difficult to predict the final outcome of such matters. The
cases and claims against the Group often raise difficult and
complex factual and legal issues, which are subject to many
uncertainties and complexities, including but not limited to the
facts and circumstances of each particular case and claim, the
jurisdiction and the differences in applicable law. In the normal
course of business management consults with legal counsel
and certain other experts on matter related to litigation and
taxes. The Group accrues a liability when it is determined that
an adverse outcome is probable and the amount of the loss
can be reasonably estimated. In the event an adverse outcome
is possible or an estimate is not determinable, the matter is
disclosed.
Accounting principles, amendments
and interpretations adopted in 2008
On 30 November 2006, the IASB issued the IFRS 8 –
Operating
Segments
that will become effective on 1 January 2009 and
which will replace IAS 14 –
Segment Reporting . The new
standard requires the information provided in segment
reporting to be based upon the components of the entity that
management uses to make decisions about operational
matters. The standard requires these operating segments to be
identified on the basis of internal reports that are regularly
reviewed by the entity’s management in order to allocate
resources to the segment and assess its performance. The
Group early adopted IFRS 8 in these Consolidated financial
statements with effect from 1 January 2008. The adoption of
this standard had no effect on the measurement of items in the
financial statements, but only on the presentation of
information by segment and geographical area.
On 5 July 2007 IFRIC issued the interpretation IFRIC 14 – IAS 19
–
The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
effective retrospectively
from 1 January 2008. The interpretation provides general
guidance on how to assess the limit in IAS 19 -
Employee
Benefits
on the amount of the surplus that can be recognised
as an asset. It also explains how the pension asset or liability
may be affected when there is a statutory or contractual
minimum funding requirement in these Consolidated financial
statements. No significant effects arose on the adoption of this
interpretation.
On 13 October 2008, the IASB issued amendments to IAS 39 -
Financial Instruments: Recognition and Measurement and IFRS
7 -
Financial Instruments: Disclosures that would permit the
reclassification of some non-derivative financial assets which
are classified under the fair value through profit or loss
category in particular circumstances. The amendment also