Chrysler 2011 Annual Report Download - page 273

Fiat S.p.A.
Statutory
Financial
Statements
at 31 December
2011
Notes
272
In compliance with European Regulation 1606 of 19 July 2002, beginning in 2005 the Fiat Group adopted the International Financial
Reporting Standards (“IFRS”), issued by the International Accounting Standards Board (“IASB”), for the preparation of its consolidated
financial statements. On the basis of national legislation implementing that Regulation, those accounting standards were also used to
prepare the separate financial statements of the Parent Company, Fiat S.p.A., for the first time for the year ended 31 December 2006.
The information required by IFRS 1 – First-time Adoption of International Financial Reporting Standards relating to the effects of the
transition to IFRS was provided in an Appendix to the 2006 separate financial statements.
The financial statements are prepared under the historical cost convention (modified where applicable for the valuation of certain
financial instruments), as well as on the going concern assumption. Despite the difficult economic and financial environment, particularly
in the eurozone, Fiat Group’s assessment is that no material uncertainty exists (as defined in paragraph 25 of IAS 1) as to its ability to
continue as a going concern. That assessment takes into account measures already implemented to integrate the Group’s automotive
activities with those of Chrysler Group and adapt the organization to changes in demand levels, as well as ensuring the Group has the
necessary industrial and financial flexibility.
Format of the financial statements
Given the activities carried out by Fiat S.p.A., presentation of the Statutory Income Statement is based on the nature of its revenues
and expenses. The Consolidated Income Statement for Fiat Group is classified according to function, which is considered more
representative of the format used for internal reporting and management purposes and is in line with international practice in the
automotive sector. For the Statement of Financial Position, Fiat S.p.A. has elected the “current and non-current” classification for the
presentation of assets and liabilities. For the Consolidated Statement of Financial Position, a mixed presentation has been elected (as
permitted under IAS 1), with the current and non-current classification applied to assets only. The consolidated financial statements
post-demerger continue to include both industrial companies and financial services companies. The financing portfolios of financial
services companies are included under current assets, as those assets will be realized in the course of the normal operating cycle.
In addition, the financial services companies only obtain a portion of their funding directly from the market. The remainder of their
funding is obtained through Group treasury companies (included under industrial activities), which provide funding to both industrial
companies and financial services companies within the Group, on the basis of their individual requirements. The distribution of financial
services activities within the Group has no impact on the presentation of financial liabilities for Fiat S.p.A. However, for the Consolidated
Statement of Financial Position, the distribution of those activities means that a classification of financial liabilities between current and
non-current would not be meaningful.
The Statement of Cash Flows is presented using the indirect method.
With regard to the requirements of Consob Resolution 15519 of 27 July 2006 relating to the format of the financial statements,
supplementary Statements of Income, Financial Position and Cash Flows with a breakdown of related-party transactions have been
provided separately so that the overall reading of the principal statements is not compromised.
Intangible assets
Goodwill
Goodwill arising from the acquisition of a company or a business unit is recognized at cost at the acquisition date. Goodwill is not
amortized, but is tested for impairment annually or more frequently if specific events indicate that an impairment loss has occurred.
After initial recognition, goodwill is measured at cost less any impairment losses.
Other intangible assets
Purchased or internally-generated intangible assets are recognized in accordance with IAS 38 – Intangible Assets, where it is probable
that the use of the asset will generate future economic benefits and where the cost of the asset can be determined reliably.
Intangible assets are measured at purchase or manufacturing cost and, for those with a finite useful life, amortized over their estimated
useful life.