Chrysler 2010 Annual Report Download - page 317

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NOTES FIAT S.P.A.
STATUTORY
FINANCIAL
STATEMENTS AT
31 DECEMBER
2010
Dividends received and receivable
Dividends from investees are recognized in the income statement when the right to receive the dividend is established.
Revenue recognition
Revenue is recognized if it is probable that economic benefits associated with the transaction will flow to the company and the
revenue can be measured reliably. Revenue is presented net of any adjusting items.
Revenue from services and from construction contracts are recognized using the percentage completion method described
under inventory.
Financial income and expense
Financial income and expense are recognized in the income statement in the period in which they become receivable or
payable.
Finance costs attributable to investments in assets that necessarily require a substantial period of time to get ready for their
intended use or sale (qualifying assets) are capitalized and amortized over the useful life of the class of assets to which they
relate.
Income taxes
The tax charge for the period is determined on the basis of prevailing laws and regulations. Taxes on income are recognized
in the income statement except to the extent that they relate to items directly charged or credited to equity, in which case the
related income tax effect is recognized in equity.
Deferred tax assets and liabilities are determined on the basis of all the temporary differences between the carrying amount
of an asset or liability in the statement of financial position and its corresponding tax basis. Deferred tax assets resulting from
unused tax losses and temporary differences are recognized to the extent that it is probable that future taxable profit will be
available against which they can be utilized.
Current and deferred income taxes and liabilities are offset when there is a legally enforceable right to offset. Deferred tax assets
and liabilities are measured at the substantively enacted tax rates that are expected to apply to taxable income in the periods
in which temporary differences will be reversed.
Fiat S.p.A. and almost all its Italian subsidiaries have elected to take part in the domestic tax consolidation program pursuant
to Articles 117/129 of the Consolidated Income Tax Act (T.U.I.R.); the election was made for a three-year period beginning in
2004. The election was renewed in 2007 and again in 2010, both times for a minimum three-year period.
Fiat S.p.A. acts as the consolidating company in this program and calculates a single taxable base for the group of companies
taking part, enabling benefits to be realized from the offsetting of taxable income and tax losses in a single tax return. Each
company participating in the consolidation transfers its taxable income or tax loss to the consolidating company. Fiat S.p.A.
recognizes receivables from companies contributing taxable income, corresponding to the amount of IRES (corporate income
tax) paid on its behalf. In the case of a company contributing a tax loss to the consolidation, Fiat S.p.A. recognizes a payable to
that company for the amount of the loss actually set off at group level.
Dividends payable
Dividends payable are recognized as changes in shareholders’ equity in the period in which they are approved by shareholders.