Chrysler 2009 Annual Report Download - page 325

FIAT S.P.A.
STATUTORY
FINANCIAL
STATEMENTS AT
31 DECEMBER
2009
NOTES
324
As part of such project, Fiat S.p.A., as the general contractor, engaged CAV.E.T. and CAV.TO.MI. for the engineering and construction activities, retaining
all work coordination, organisational and management activities. Contract work in progress therefore reflects the fees earned by Fiat S.p.A. in the form of
a percentage (approximately 3.6%) of the contractual amounts, for the activities directly carried out. The work is paid through progress payments made by
T.A.V. S.p.A. to Fiat S.p.A. based on the stage of completion of the works and advance payments, which Fiat S.p.A. then pays over to CAV.E.T. and CAV.
TO.MI. net of its contractual percentage earned.
These amounts may be analysed by line as follows:
(€ thousand) At 31 December 2009 At 31 December 2008 Change
Contract work in progress 237,254 401,508 (164,254)
Florence-Bologna line 159,355 150,597 8,758
Turin-Novara line - 181,915 (181,915)
Novara-Milan line 77,899 68,996 8,903
Less: Progress payments for work completed 242,370 409,864 (167,494)
Florence-Bologna line 160,580 152,832 7,748
Turin-Novara line - 181,991 (181,991)
Novara-Milan line 81,790 75,041 6,749
Gross amount due to the customer 5,116 8,356 (3,240)
Florence-Bologna line 1,225 2,235 (1,010)
Turin-Novara line - 76 (76)
Novara-Milan line 3,891 6,045 (2,154)
Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in this case is the consideration
contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs relating to the contract revenue recognised totalled €95,589 thousand
at 31 December 2009 (€133,819 thousand at 31 December 2008). Changes in contract work in progress have been recognised in the income statement
under the item other operating income (see Note 4). When the lines are contractually completed, the final contractual revenue for the activities directly
carried out will be recognised in the income statement under other operating income, net of any decrease in inventories. At the same time the accounts for
inventories and amounts classified as advances will be closed.
From an accounting perspective, the Turin-Novara line project was closed in 2009 based on the following:
in February 2006, the high-speed line was opened to the public and, pursuant to contractual terms for the final approval of the work, the Principal Final Test
Certificate was issued in December 2006 for work representing around 94% of the total value of the line;
in subsequent years, activities for completion of ancillary work and cleanup continued, as well as additional contractual obligations necessary for
release of bank guarantees relating to work subject to the Principal Final Test. Once all activities were completed in the final part of 2009, the
Secondary Final Test Certificate relating to the residual work was signed in December 2009, which from an accounting perspective was considered
the closing of the project.
Net advances for work completed were as follows:
Net advances
Advances received from customers Advances paid to suppliers for work completed
At 31 At 31 At 31 At 31 At 31 At 31
December December December December December December
(€ thousand) 2009 2008 2009 2008 2009 2008
Florence-Bologna line 5,086,961 4,684,585 4,926,381 4,531,753 160,580 152,832
Turin-Novara line - 4,666,913 - 4,484,922 - 181,991
Novara-Milan line 2,245,905 2,061,138 2,164,115 1,986,097 81,790 75,041
Progress payments for work completed 7,332,866 11,412,636 7,090,496 11,002,772 242,370 409,864