Chrysler 2008 Annual Report Download - page 262

Fiat S.p.A. Statutory Financial Statements at 31 December 2008 261
Financial instruments
Presentation
Financial instruments held by the Company are presented in
the financial statements as described in the following
paragraphs:
Non-current assets: Investments, Other financial assets, Other
non-current assets.
Current assets: Trade receivables, Current financial receivables,
Other current receivables, Cash and cash equivalents.
Non-current liabilities: Non-current financial payables, Other
non-current liabilities.
Current liabilities: Trade payables, Current financial payables
(including asset-backed financing), Other payables.
The item Cash and cash equivalents include cash at banks,
units in liquidity funds and other money market securities that
are readily convertible into cash and are subject to an
insignificant risk of changes in value.
Non-current financial payables includes liabilities related to
financial guarantees. These financial guarantees are contracts
where the company undertakes to make specific payments to a
counterparty for losses incurred as a result of the failure of a
specified borrower to make payment in accordance with the
terms of a given debt instrument. The present value of any
related fees receivable is recognised under Non-current
financial assets.
Measurement
Investments in subsidiaries and associate companies are
stated at cost adjusted for any impairment losses.
Any positive difference, arising on acquisition, between the
purchase cost and the fair value of net assets acquired by the
Company in the investee company is, accordingly, included in
the carrying amount of the investment.
Investments in subsidiaries and associate companies are tested
annually, or more often if necessary, for evidence of
impairment. Where evidence of impairment exists, an
impairment loss is recognised directly in the income
statement. If the company’s share of losses of the investee
exceeds the carrying amount of the investment and if the
company has an obligation or intends to respond for these
losses, the company’s interest is reduced to zero and a liability
is recognised for its share of the additional losses. If the
impairment loss subsequently no longer exists it is reversed
and the reversal is recognised in the income statement up to
the limit of the cost of the investment.
Investments in other companies, comprising non-current
financial assets that are not held for trading (available-for-sale
financial assets), are initially measured at fair value. Any
subsequent profits and losses resulting from changes in fair
value, correlated to their market price, are recognised directly
in equity until the investment is sold or is impaired; when the
asset is disposed of, the cumulative gains or losses, including
those previously recognised in equity, are reclassified in the
income statement for the period; when the asset is impaired,
accumulated losses are recognised in the income statement.
Investments in other smaller companies for which a market
price is not available are measured at cost, adjusted for any
impairment losses.
Other financial assets which the company has the intention to
hold to maturity are recognised on the basis of the settlement
date and, on initial recognition, are measured at acquisition
cost (being representative of fair value) on initial recognition in
the balance sheet, inclusive of transaction costs other than in
respect of assets held for trading. These assets are
subsequently measured at amortised cost using the effective
interest method.
Other non-current assets, Trade receivables, Current financial
receivables and Other current receivables, excluding assets
deriving from derivative financial instruments and all financial
assets for which published price quotations in an active market
are not available and whose fair value cannot be determined
reliably, are measured, to the extent that they have a fixed
term, at amortised cost, using the effective interest method.
When the financial assets do not have a fixed term, they are
measured at cost. Receivables with maturities of over one year
which bear no interest or an interest rate significantly lower
than market rates are discounted using market rates.