Chrysler 2008 Annual Report Download - page 265

Fiat S.p.A. Statutory Financial Statements at 31 December 2008264
Other long-term benefits
The accounting treatment of other long-term benefits is the
same as that for post-employment benefit plans except for the
fact that actuarial gains and losses and past service costs are
fully recognised in the income statement in the year in which
they arise and the corridor method is not applied.
Equity compensation plans
The company provides additional benefits to certain members
of senior management and employees through equity
compensation plans. Under IFRS 2 -
Share-based Payment ,
these plans are a component of recipient remuneration whose
cost is measured by the fair value of the stock options at the
grant date and recognised in the income statement on a
straight-line basis from the grant date to the vesting date, with
the offsetting credit recognised directly in equity. Any
subsequent changes to fair value do not have any effect on the
initial measurement.
In accordance with the transitional provisions of IFRS 2, the
Company applied the Standard to all stock options granted
after 7 November 2002 and not yet vested at 1 January 2005,
the effective date of the Standard. Detailed information is
provided in respect of all stock options granted on or prior to 7
November 2002.
The compensation component from stock option plans based
on Fiat S.p.A. shares relating to employees of other Group
companies is recognised as a capital contribution to the
subsidiaries which employ beneficiaries of the stock option
plans, in accordance with IFRIC 11 and, as a result, is recorded
as an increase in the carrying amount of the investment, with
the offsetting credit being recognized directly in equity.
Provisions
The company recognises provisions when it has a legal or
constructive obligation to third parties, when it is probable that
an outflow of resources will be required to satisfy the obligation
and when a reliable estimate of the amount can be made.
Changes in estimates are reflected in the income statement in
the period in which the change occurs.
Treasury shares
Treasury shares are presented as a deduction from equity. The
original cost of treasury shares and the proceeds of any
subsequent sale are presented as movements in equity.
Dividends received and receivable
Dividends received and receivable from investments are
recognised in the income statement when the right to receive
the dividend is established and only if they relate to profits
distributed subsequent to acquisition.
If dividends are declared from pre-acquisition net income,
those dividends are deducted from the cost of the investment.
Revenue recognition
Revenue is recognised if it is probable that economic benefits
associated with the transaction will flow to the company and
the revenue can be measured reliably. Revenue is presented
net of any adjusting items.
Revenues from services and revenue from construction
contracts are recognised using the percentage completion
method described under Inventories. Revenues from royalties
are recognised on an accrual basis in accordance with the
terms of the relevant agreement.
Financial income and expense
Financial income and expense are recognised and measured in
the income statement on an accrual basis.
Ta x e s
The tax charge for the period is determined on the basis of
prevailing laws and regulations. Taxes on income are
recognised in the income statement except to the extent that
they relate to items directly charged or credited to equity, in
which case the related income tax effect is recognised in
equity.