Chrysler 2011 Annual Report Download - page 274

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Fiat S.p.A. - Statutory
Financial Statements
at 31 December 2011
Property, plant and equipment
Cost
Property, plant and equipment are stated at acquisition or production cost, net of accumulated depreciation and impairment losses,
and are not revalued.
Subsequent expenditures are only capitalized where they increase the future economic benefits of the asset to which they relate. All
other expenditures are expensed as incurred.
The method and rates used for depreciating assets are provided below.
Leases where the lessor retains substantially all the risks and rewards of ownership of the assets are classified as operating leases.
Costs related to operating leases are recognized on a straight-line basis over the duration of the lease.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful life of an asset as follows:
Annual depreciation rate
Buildings 3%
Plants 10%
Furniture 12%
Fixtures 20%
Vehicles 25%
Land is not depreciated.
Impairment
At least annually, the Company evaluates recoverability of the value of intangible assets, tangible assets and investments in subsidiaries
and associates, in order to determine whether those assets have suffered a loss in value. If there are indications of impairment, 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 investee in the separate financial statements exceeds the book value of equity (including any associated
goodwill) as recognized in the consolidated financial statements
if dividends exceed 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.
When testing for impairment of investments in subsidiaries and associates whose market value (fair value less disposal costs) cannot
be reliably measured, the recoverable amount is based on value in use, which – in line with the requirements of paragraph 33 of IAS
28 – is determined by estimating the present value of estimated future cash flows and a theoretical terminal value.
Where impairment of an asset subsequently reverses, the carrying amount of that asset is increased to the revised estimate of its
recoverable amount, not to exceed the carrying amount that would have been determined had no impairment loss been recognized.
A reversal of an impairment loss is recognized immediately in the income statement.