Chrysler 2010 Annual Report Download - page 152

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Foreign currency transactions
Transactions in foreign currencies are recorded at the foreign exchange rate prevailing at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rate prevailing
at that date. Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different
from those at which they were initially recorded during the period or in previous financial statements, are recognised in the
income statement.
Consolidation of foreign entities
All assets and liabilities of foreign consolidated companies with a functional currency other than the Euro are translated using
the exchange rates in effect at the balance sheet date. Income and expenses are translated at the average exchange rate for
the period. Translation differences resulting from the application of this method are classified as equity until the disposal of the
investment. Average rates of exchange are used to translate the cash flows of foreign subsidiaries in preparing the consolidated
statement of cash flows.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are recorded in the relevant functional currency
of the foreign entity and are translated using the period end exchange rate.
The principal exchange rates used in 2010 and 2009 to translate into Euros the financial statements prepared in currencies
other than the Euro were as follows:
Average 2010 At 31 December 2010 Average 2009 At 31 December 2009
U.S. dollar 1.326 1.336 1.395 1.441
Pound sterling 0.858 0.861 0.891 0.888
Swiss franc 1.380 1.250 1.510 1.484
Polish zloty 3.995 3.975 4.328 4.105
Brazilian real 2.331 2.218 2.767 2.511
Argentine peso 5.183 5.303 5.201 5.473
In the context of IFRS First-time Adoption, the cumulative translation difference arising from the consolidation of foreign
operations outside the Euro zone was set at nil, as permitted by IFRS 1; gains or losses on subsequent disposal of any foreign
operation only include accumulated translation differences arising after 1 January 2004.
Business Combinations
Business combinations are accounted for by applying the acquisition method. Under this method, the consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
assets transferred and liabilities assumed by the Group and the equity interests issued in exchange for control of the acquiree.
Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at that date,
except for the following which are measured in accordance with the relevant standard:
deferred tax assets and liabilities;
assets and liabilities relating to employee benefit arrangements;
liabilities or equity instruments relating to share-based payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based payment arrangements of the acquiree;
assets (or disposal groups) that are classified as held for sale.