Chrysler 2009 Annual Report Download - page 135

134 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
Intangible assets
Goodwill
In the case of acquisitions of businesses, the acquired identifiable assets, liabilities and contingent liabilities are recorded at
fair value at the date of acquisition. Any excess of the cost of the business combination over the Group’s interest in the fair
value of those assets and liabilities is classified as goodwill and recorded in the financial statement as an intangible asset. If this
difference is negative (negative goodwill), it is recognised in the income statement at the time of acquisition.
When the Group acquires a non-controlling interest in controlled companies the excess of the acquisition cost over the carrying
value of the assets and liabilities acquired is recognised as goodwill (the “Parent entity extension method”).
Goodwill is not amortised, but is tested for impairment annually or more frequently if events or changes in circumstances indicate
that it might be impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
On disposal of part or whole of a business which was previously acquired and which gave rise to the recognition of goodwill,
the remaining amount of the related goodwill is included in the determination of the gain or loss on disposal.
In the context of IFRS First-time Adoption, the Group elected not to apply IFRS 3 – Business Combinations retrospectively to
the business combinations that occurred before 1 January 2004; as a consequence, goodwill arising on acquisitions before the
date of transition to IFRS has been retained at the previous Italian GAAP amounts, subject to impairment testing at that date.
Development costs
Development costs for vehicle project production (cars, trucks, buses, agricultural and construction equipment, related
components, engines, and production systems) are recognised as an asset if and only if both of the following conditions are
met: that development costs can be measured reliably and that technical feasibility of the product, volumes and pricing support
the view that the development expenditure will generate future economic benefits. Capitalised development costs include all
direct and indirect costs that could be directly attributable to the development process. Capitalised development costs are
amortised on a systematic basis from the start of production of the related product over the product‘s estimated average life,
as follows:
N° of years
Cars 4 - 5
Trucks and Buses 8
Agricultural and Construction Equipment 5
Engines 8 - 10
Components and Production Systems 3 - 5
All other development costs are expensed as incurred.
Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives consist principally of acquired trademarks which have no legal, contractual,
competitive, economic, or other factors that limit their useful lives. Intangible assets with indefinite useful lives are not amortised,
but are tested for impairment annually or more frequently whenever there is an indication that the asset may be impaired.