Chrysler 2011 Annual Report Download - page 140

139
Consolidated
Financial
Statements
at 31 December
2011
Notes
Consolidated
Financial Statements
at 31 December 2011
Notes to the Consolidated
Financial Statements
Principal activities
Fiat S.p.A. is a corporation organised under the laws of the Republic of Italy. Fiat S.p.A. and its subsidiaries (the “Group”) operate
in approximately 43 countries. Following the demerger of some operations of Fiat S.p.A. to Fiat Industrial S.p.A. (“the Demerger”)
described below, from 1 January 2011 the Group is engaged in the manufacture and sale of automobiles and light commercial vehicles,
engines, transmission systems, automotive-related components, metallurgical products and production systems. In addition, the
Group has for a long while also been involved in certain other sectors, including publishing and communications, which represent a
small portion of its activities.
The Group has its head office in Turin, Italy.
The consolidated financial statements are presented in Euros that is the currency of the primary economic environment in which the
Group operates.
Significant accounting policies
Basis of preparation
The 2011 consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (the
“IFRS”) issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union, and with the provisions
implementing article 9 of Legislative Decree no. 38/2005. The designation “IFRS” also includes all valid International Accounting
Standards (“IAS”), as well as all interpretations of the IFRS Interpretations Committee, formerly the Standing Interpretations Committee
(“SIC”) and then the International Financial Reporting Interpretations Committee (“IFRIC”).
The financial statements are prepared under the historical cost convention, modified as required for the valuation of certain financial
instruments, as well as on the going concern assumption. In this respect, despite operating in an economic and financial environment
that continues to be difficult, the Group’s assessment is that no material uncertainties (as defined in paragraph 25 of IAS 1) exist about
its ability to continue as a going concern, in view also of the integration process being undertaken with Chrysler and the Group’s
industrial and financial flexibility.
Format of the financial statements
The Group presents an income statement using a classification based on the function of expenses (otherwise known as the “cost of
sales” method), rather than based on their nature, as this is believed to provide information that is more relevant. The format selected
is that used for managing the business and for management reporting purposes and is consistent with international practice in the car
industry. In this income statement, in which the classification of expenses is based on their function, the Trading profit/(loss) is reported
specifically as part of Operating profit/(loss) and separate from the income and expense resulting from non-recurring transactions,
such as Gains (losses) on the sale of investments, Restructuring costs and any Other income (expenses) defined as unusual and
of a similar nature to these items. By doing this, it is believed that the Group’s actual performance from normal trading operations
may be better measured, while disclosing specific details of unusual income and expenses. Consequently, the definition of unusual
transaction adopted by the Group differs from that provided in the Consob Communication of 28 July, 2006, under which unusual and
abnormal transactions are those which, “because of their significance or importance, the nature of the parties involved, the object of the
transaction or the methods of determining the transfer price or the timing of the event (close to the year-end), may give rise to doubts
regarding the accuracy/completeness of the information in the financial statements, conflicts of interest, the safeguarding of an entity’s
assets or the protection of non-controlling interests”.