Chrysler 2009 Annual Report Download - page 141

140 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
Post-employment plans other than pensions
The Group provides certain post-employment defined benefit, mainly health care plans. The method of accounting and the
frequency of valuations are similar to those used for defined benefit pension plans.
The scheme underlying the employee severance indemnity of the Italian Group companies (the TFR) was classified as a defined
benefit plan until 31 December 2006. The legislation regarding this scheme and leading to this classification was amended by
Law no. 296 of 27 December 2006 (the “2007 Finance Law”) and subsequent decrees and regulations issued in the first part
of 2007. In view of these changes, and with specific reference to those regarding companies with at least 50 employees, this
scheme only continues to be classified as a defined benefit plan in the consolidated financial statements for those benefits
accruing up to 31 December 2006 (and not yet settled by the balance sheet date), while after that date the scheme is classified
as a defined contribution plan.
Equity compensation plans
The Group provides additional benefits to certain members of senior management and employees through equity compensation
plans (stock option plans and stock grants). In accordance with IFRS 2 – Share-based Payment, these plans represent a
component of recipient remuneration. The compensation expense, corresponding to the fair value of the instruments at the
grant date, is recognised in the income statement on a straight-line basis over the period 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 Group 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.
Provisions
The Group records provisions when it has an obligation, legal or constructive, to a third party, when it is probable that an outflow
of Group 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.
Revenue recognition
Revenue is recognised if it is probable that the economic benefits associated with the transaction will flow to the Group and
the revenue can be measured reliably. Revenues are stated net of discounts, allowances, settlement discounts and rebates,
as well as costs for sales incentive programs, determined on the basis of historical costs, country by country, and charged
against profit for the period in which the corresponding sales are recognised. The Group’s sales incentive programs include
the granting of retail financing at significant discount to market interest rates. The corresponding cost is recognised at the time
of the initial sale.
Revenues from the sale of products are recognised when the risks and rewards of ownership of the goods are transferred to
the customer, the sales price is agreed or determinable and receipt of payment can be assumed: this corresponds generally to
the date when the vehicles are made available to non-group dealers, or the delivery date in the case of direct sales. New vehicle
sales with a buy-back commitment are not recognised at the time of delivery but are accounted for as operating leases when it
is probable that the vehicle will be bought back. More specifically, vehicles sold with a buy-back commitment are accounted for
as assets in Inventory if the sale originates from the Fiat Group Automobiles business (agreements with normally a short-term
buy-back commitment); and are accounted for in Property, plant and equipment, if the sale originates from the Commercial