Chrysler 2010 Annual Report Download - page 313

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NOTES FIAT S.P.A.
STATUTORY
FINANCIAL
STATEMENTS AT
31 DECEMBER
2010
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 recognized 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 impairment. Where
evidence of impairment exists, an impairment loss is recognized 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 intention to cover
these losses, the company’s interest is reduced to zero and a liability is recognized for its share of the additional losses. If the
impairment loss subsequently no longer exists or is reduced, a reversal is recognized in the income statement up to the limit of
the cost of the investment.
Investments in other companies, comprising non-current financial assets that are not held for trading (available-for-sale
financial assets), are initially measured at fair value. Any subsequent profits and losses resulting from changes in fair value,
correlated to their market price, are recognized directly in equity until the investment is sold or is impaired; when the asset
is disposed of, the cumulative gains or losses, including those previously recognized in equity, are reclassified in the income
statement for the period; when the asset is impaired, accumulated losses are recognized in the income statement. Investments
in other smaller companies for which a market price is not available are measured at cost, adjusted for any impairment losses.
Other financial assets which the company has the intention to hold to maturity are recognized on the basis of the settlement
date and, on initial recognition, are measured at acquisition cost (being representative of fair value) on initial recognition in the
statement of financial position, inclusive of transaction costs other than in respect of assets held for trading. These assets are
subsequently measured at amortized cost using the effective interest method.
Other non-current assets, trade receivables, current financial receivables and other current receivables, excluding
assets deriving from derivative financial instruments and all financial assets for which published price quotations in an active
market are not available and whose fair value cannot be determined reliably, are measured, to the extent that they have a
fixed term, at amortized cost, using the effective interest method. When the financial assets do not have a fixed term, they are
measured at cost. Receivables with maturities of over one year which bear no interest or an interest rate significantly lower than
market rates are discounted using market rates.