Chrysler 2011 Annual Report Download - page 279

Fiat S.p.A.
Statutory
Financial
Statements
at 31 December
2011
Notes
278
Financial income and expense
Financial income and expense are recognized in the income statement in the period in which they are earned or incurred.
Finance costs related to investments in qualifying assets that require a substantial period of time to prepare for their intended future use
or sale are capitalized and amortized over the useful life of the asset.
Income taxes
The tax charge for the period is determined on the basis of existing law. Taxes on income are recognized in profit and loss, except
where they relate to items charged or credited directly to equity, in which case the tax effect is also recognized directly in equity.
For deferred tax assets and liabilities, determination is based on the temporary differences existing 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 legal right to do so. Deferred tax assets and liabilities are
measured at the tax rates that are expected to apply to the period when the temporary difference is reversed.
Fiat S.p.A. and almost all its Italian subsidiaries elected to take part in the domestic tax consolidation program pursuant to Articles
117/129 of Presidential Decree 917/1986 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.
Under the program, Fiat S.p.A. is the consolidating company and calculates a single taxable base for the group of companies taking
part, enabling benefits from offsetting taxable income and tax losses in a combined tax return. Each company participating in the
consolidation transfers its taxable income or tax loss to the consolidating company. Fiat S.p.A. recognizes a receivable for companies
contributing taxable income, corresponding to the amount of IRES (corporate income tax) payable on their behalf. For companies
contributing a tax loss, Fiat S.p.A. recognizes a payable for the amount of the loss actually set off at group level.
Dividends payable
Dividends payable are recognized as changes in equity in the period in which they are approved by Shareholders.
Use of estimates
Preparation of the financial statements and notes in conformity with IFRS requires that management make judgments, estimates and
assumptions which impact on the values reported for assets and liabilities, as well as disclosures relating to contingent assets and
liabilities at the balance sheet date. The estimates and assumptions used are based on past experience and other factors considered
relevant. However, actual results could differ from those estimates. Estimates and assumptions are reviewed periodically and the
impacts of any resulting changes are recognized directly in profit or loss in the period in which the estimates are revised, if the revision
impacts only that period, or also in future periods, if the revision impacts both the current and future periods.
Due to continuing economic difficulties, particularly in the eurozone, assumptions regarding future performance are subject to
significant uncertainty. It cannot be excluded, therefore, that actual results in the future could differ from estimates, potentially requiring
adjustments (which at present can neither be estimated nor predicted), even significant, to values based on those estimates. The
line item most impacted by estimates is “Investments in subsidiaries and associates” (non-current assets), where estimates are used
in determining impairment losses and reversals. No particular or significant issues arose, however, in relation to estimates used for
recognition of employee benefits, taxes or provisions.