Chrysler 2009 Annual Report Download - page 149

148 FIAT GROUP
CONSOLIDATED
FINANCIAL
STATEMENTS
AT 31 DECEMBER
2009
NOTES
Improvement to IAS 19 – Employee Benefits
The improvement to IAS 19 – Employee Benefits clarifies the definition of positive/negative past service costs and states that in the
case of a curtailment, only the effect of the reduction for future service shall be recognised immediately in the income statement,
while the effect arising from past service periods shall be considered a negative past service cost. This amendment should be
adopted prospectively to changes to plans occurring on or after 1 January 2009, but there was no significant accounting effect at
31 December 2009 for the Group following the adoption.
The improvement also revises the definition of the return on plan assets, stating that this amount should be stated net of any costs
for administering the plan (other than those included in the measurement of the defined benefit obligation) and clarifies the definition
of short-term employee benefits and other long-term employee benefits. The Group adopted this amendment retrospectively from
1 January 2009 for the definitions of return on plan assets and short-term and long-term employee benefits, although no effects
arose as the Group’s accounting treatment of these items was already consistent with the requirements of the amendment.
Improvement to IAS 20 – Government Grants and Disclosure of Government Assistance
The improvement to IAS 20 – Government Grants and Disclosure of Government Assistance requires the benefit of a government
loan at a below-market rate of interest to be treated as a government grant and then accounted for in accordance with IAS 20.
The previous version of IAS 20 required no benefits to be separately recognised in the case of a government loan received as a
grant at a below-market rate of interest; the Group accordingly recognised loans at the amount of the proceeds received and
recognised the lower interest expense on such loans directly in income statement as financial income (expenses).
In accordance with the transition rules, the Group adopted the improvement on 1 January 2009 to government loans obtained
on or after that date at below-market rates. For such loans, on disbursement the Group recognises the loan at its fair value
and deferred income for the amount corresponding to the benefit yet to be received of obtaining the loan at a below-market
interest rate (namely the grant, the difference between the fair value of the loan and the amount received). This benefit is then
recognised in income when and only when all conditions for the grant to be recognised are satisfied, on a systematic basis over
the periods necessary to match the income with the costs which it is intended to offset. No significant accounting effects arose
at 31 December 2009 from adopting the improvement.
Improvement to IAS 28 – Investments in Associates
The improvement to IAS 28 – Investments in Associates requires that for investments accounted for using the equity method
a recognised impairment loss should not be allocated to any asset (and in particular goodwill) that forms part of the carrying
amount of the investment in the associate, but to the carrying amount of the investment overall. Accordingly any reversal of that
impairment loss is recognised in full.
In accordance with the transition rules, the Group elected to apply the amendment prospectively to reversals recognised from
1 January 2009, although no effects arose in 2009 from its adoption as the Group did not recognise any reversal of impairment
losses on goodwill that formed part of the carrying amount of an investment during the year.
This amendment also leads to changes in certain disclosures relating to investments in associates and joint ventures measured
at fair value in accordance with IAS 39, at the same time amending also IAS 31 - Interests in Joint Ventures, IFRS 7 - Financial
Instruments - Disclosures and IAS 32 - Financial Instruments - Presentation. These changes regard circumstances that were
not present in the Group at the date of this financial statement.
Improvement to IAS 38 – Intangible Assets
The improvement to IAS 38 – Intangible Assets requires expenditure on advertising and promotional activities to be recognised
as an expense. Further, in the case expenditure is incurred to provide future economic benefits to an entity but no intangible
asset is recognised, an entity shall recognise the expenditure as an expense when it has the right to access the goods in the
case of the supply of goods or when it receives the services in the case of the supply of services. The standard has also been
amended 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.