Chrysler 2009 Annual Report Download - page 282

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Impairment
The Company reviews, at least annually, the recoverability of the carrying amount of intangible assets, tangible assets and
investments in subsidiaries and associate companies, in order to determine whether there is any indication that those assets
have suffered an impairment loss. If indications of impairment are present, the carrying amount of the asset is reduced to its
recoverable amount.
For investments in subsidiaries and associates that have distributed a dividend, the following are also considered indicators of
impairment:
if the carrying amount of the investment in the separate financial statements exceeds the book value of that company’s equity
(including any associated goodwill) as recognised in the consolidated financial statements;
if the dividend exceeds the comprehensive income of the investee for the period to which the dividend relates.
The recoverable amount of an asset is the higher of fair value less disposal costs and its value in use.
In particular, in assessing whether investments in subsidiaries and associate companies are impaired, as their market value (fair
value less costs to sell) cannot be reliably measured, the recoverable amount is considered to be their value in use, which is
determined by estimating the present value of the estimated future cash flows based on expected profit or loss and a theoretical
ultimate disposal, in line with the requirements of paragraph 33 of IAS 28.
Where an impairment loss for assets subsequently no longer exists or has decreased, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but not in excess of the carrying amount that would have been
recorded had no impairment loss been recognised. A reversal of an impairment loss is recognised in the income statement
immediately.
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 includes 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 other 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