Chrysler 2008 Annual Report Download - page 124

Fiat Group Consolidated Financial Statements at 31 December 2008 123
goods, the entity recognise such expenditure as an expense
when it has the right to access the goods. In the case of the
supply of services, an entity shall recognise the expenditure as
an expense when it receives the services. Moreover, the
standard has been revised in order to allow entities to use the
unit of production method for determining the amortisation
charge for an intangible asset with a finite useful life. The Group
is currently assessing any effect that the adoption of this new
standard may have on the financial statements.
IAS 39 – Financial Instruments: Recognition and
Measurement
: this amendment, effective retrospectively from
1 January 2009, clarifies how to calculate the revised effective
interest rate on ceasing fair value hedge accounting and notes
additionally that the prohibition on the reclassification of
financial instruments into or out of the fair value through profit
or loss category after initial recognition should not prevent a
derivative from being accounted for at fair value through profit
or loss when it does not qualify for hedge accounting and vice
versa. Finally, in order to eliminate conflict with IFRS 8 –
Operating Segments , it removes the reference to designating
and documenting hedges at sector level. The Group is currently
assessing any effect that the adoption of this new standard
may have on the financial statements.
On 3 July 2008 the IFRIC issued an interpretation, IFRIC 16 –
Hedges of a Net Investment in a Foreign Operation . The main
change expected to arise from this interpretation is the
elimination of the possibility for an entity to apply hedge
accounting for a hedge of the foreign exchange differences
between the functional currency of a foreign operation and the
presentation currency of the parent’s consolidated financial
statements. Moreover, the interpretation clarifies that in a
hedge of a net investment in a foreign operation the hedging
instrument may be held by any entity or entities within the
group and that IAS 21 –
The effects of changes in Foreign
Exchange rates
shall be applied to determine the amount that
needs to be reclassified from equity to profit or loss for the
hedged item when an entity disposes of the investment. This
interpretation, effective from 1 January 2009, had not yet been
endorsed by the European Union at the date of this
Consolidated financial statements.
On 31 July 2008, the IASB issued an amendment to IAS 39 –
Financial Instruments: Recognition and Measurement which is
to be applied retrospectively from 1 January 2010 .The
amendment clarifies how the existing principles underlying
hedge accounting should be applied in particular situations.
As of the date of this Consolidated financial statements, the
amendment had not yet been endorsed by the European Union.
Accounting principles, amendments and
interpretations not applicable by the Group
The following amendments, improvements and interpretations
have also been issued, relating to matters that were not
applicable to the Group at the date of the financial statements:
On 14 February 2008 the IASB issued an amendment to IAS
32 –
Financial Instruments: Presentation and to IAS 1
Presentation of Financial Statements - Puttable Financial
Instruments and Obligations Arising on Liquidation
. These
amendments require puttable financial instruments and
instruments, or components of instruments that impose on an
entity an obligation to deliver to another party a pro rata share
of the net assets of the entity only on liquidation, to be
classified as equity instruments. This amendment is effective
prospectively from 1 January 2009.
Improvement to IAS 28 – Investments in Associates , and
IAS 31 –
Investments in Joint Ventures : these amendments,
effective from 1 January 2009, require specific new
disclosures to be made for investments in associates and joint
ventures measured at fair value in accordance with IAS 39.
IFRS 7
Financial Instruments: Disclosures and IAS 32:
Financial Instruments: Presentation has accordingly also been
amended.
Improvement to IAS 29 – Financial Reporting in
Hyperinflationary Economies
: the previous version of the
standard did not reflect the fact that a number of assets and
liabilities may or must be measured on the basis of a current
value rather than historical value. This amendment, made in
order to reflect this, is effective prospectively from 1 January
2009.