Chrysler 2010 Annual Report Download - page 312

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Property, plant and equipment
Cost
Property, plant and equipment are stated at acquisition or production cost, net of accumulated depreciation and any impairment
losses, and are not revalued.
Subsequent expenditures are capitalized only if they increase the future economic benefits embodied in that asset. All other
expenditures are expensed as incurred.
The assets are depreciated by the method and at the rates indicated below.
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as operating
leases. Operating lease expenditures are expensed on a straight-line basis over the lease term.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful life of an asset as follows:
Annual depreciation rate
Buildings 3%
Plant 10%
Furniture 12%
Fixtures 20%
Vehicles 25%
Land is not depreciated.
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 recognized 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 recognized. A reversal of an impairment loss is recognized in the income statement
immediately.