Chrysler 2012 Annual Report Download - page 133

Notes
132 Consolidated
Financial
Statements
at 31 December
2012
In the context of IFRS First-time adoption, the cumulative translation difference arising from the consolidation of foreign operations
outside the Eurozone was set at nil, as permitted by IFRS 1; any gains or losses on the subsequent disposal of any foreign operations
therefore only include the accumulated translation differences arising since 1 January 2004.
Business Combinations
Business combinations are accounted for by applying the acquisition method. Under this method:
The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-
date fair values of the assets acquired and liabilities assumed by the Group and the equity interests issued in exchange for control
of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at that date,
except for deferred tax assets and liabilities, assets and liabilities relating to employee benefit arrangements, liabilities or equity
instruments relating to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group
entered into to replace share-based payment arrangements of the acquiree and assets (or disposal groups) that are classified as
held for sale, which are measured in accordance with the relevant standard.
Goodwill is measured as the excess of the aggregate of the consideration transferred in the business combination, the amount of any
non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If the net of the acquisition-
date amounts of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the
amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interest is initially measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s
identifiable net assets. The selection of the measurement method is made on a transaction-by-transaction basis.
Any contingent consideration arrangement in the business combination is measured at its acquisition-date fair value and included
as part of the consideration transferred in the business combination in order to determine goodwill. Changes in the fair value of
the contingent consideration that qualify as measurement period adjustments are recognised retrospectively, with corresponding
adjustments to goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during
the ‘measurement period’ (which may not exceed one year from the acquisition date) about facts and circumstances that existed as
of the acquisition date. Any changes in fair value after the measurement period are recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured at its
acquisition-date fair value and the resulting gain or loss, if any, is recognised in income statements. Changes in the equity interest in
the acquiree that have been recognised in Other comprehensive income in prior reporting periods are reclassified to profit or loss as if
the interest had been disposed.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete in the consolidated financial statements. Those
provisional amounts are adjusted during the measurement period to reflect new information obtained about facts and circumstances
that existed at the acquisition date which, if known, would have affected the amounts recognised at that date.
Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous version of IFRS 3.