Chrysler 2012 Annual Report Download - page 295

Notes
294 Fiat S.p.A.
Statutory
Financial
Statements
at 31 December
2012
Advances
This item consists of the difference between inventories and progress payments and contractual advances received from the customer Treno Alta Velocità
– T.A.V. S.p.A. (merged into Rete Ferroviaria Italiana S.p.A. as of 31 December 2010) for contract work in progress and is made up as follows:
(€ thousand) 31 December 2012 31 December 2011 Change
Contract work in progress 244,858 244,331 527
Less: Net advances for work completed 245,426 245,130 296
Gross amount due to the customer 568 799 (231)
Net contractual advances 132 141 (9)
Total advances 700 940 (240)
The item relates to contracts for the high speed railway project between Fiat S.p.A. and Treno Alta Velocità – T.A.V. S.p.A. (which was in turn engaged by
F.S. S.p.A.), for the operational engineering and construction of two lines (Bologna-Florence and Turin-Milan, the latter divided into two sub-lines: Turin-
Novara and Novara-Milan). At 31 December 2012, the contractual amounts (including for additional work, monetary adjustments and other contractual
amounts) totaled €5,233 million for the Bologna-Florence line and €2,285 million for the Milan-Novara sub-line. The contractual amount for the Turin-
Novara sub-line (project completed and accounting closed at the end of 2009) was €4,669 million.
As part of such project, Fiat S.p.A., as the general contractor, engaged CAV.E.T. and CAV.TO.MI. for the engineering and construction activities, retaining
all work coordination, organizational and management activities. Contract work in progress therefore reflects the fees earned by Fiat S.p.A. in the form of a
percentage (approximately 3.5%) of the contractual amounts, for the activities directly carried out. The work is paid through progress payments made by
the customer to Fiat S.p.A. based on the stage of completion of the works and advance payments, which Fiat S.p.A. then pays over to CAV.E.T. and CAV.
TO.MI. net of its contractual percentage earned.
These amounts may be analyzed by line as follows:
(€ thousand) 31 December 2012 31 December 2011 Change
Contract work in progress 244,858 244,331 527
- Florence-Bologna line 162,212 161,777 435
- Novara-Milan line 82,646 82,554 92
Less: Net advances for work completed 245,426 245,130 296
- Florence-Bologna line 162,580 162,294 286
- Novara-Milan line 82,846 82,836 10
Gross amount due to the customer 568 799 (231)
- Florence-Bologna line 368 517 (149)
- Novara-Milan line 200 282 (82)
Contract work in progress is measured on the basis of the stage of completion in relation to the sales price, which in this case is the consideration
contractually agreed for the activities directly carried out by Fiat S.p.A. Contract costs relating to the contract revenue recognized totaled €98,750 thousand
at 31 December 2012 (€98,106 thousand at 31 December 2011). Changes in contract work in progress have been recognized in the income statement
under the item other operating income (see Note 4). When the lines are contractually completed, the final contractual revenues for the activities directly
carried out are recognized in the income statement under other operating income, net of any decrease in inventories. At the same time, the accounts for
inventories and amounts classified as advances are closed.
In 2009, the Secondary Final Test Certificate relating to the completion of residual work on the Turin-Novara line was signed, representing the final
contractual document for the work on the line, and the project was closed from an accounting perspective (the Principal Final Test Certificate had already
been signed in 2006, year in which the line was opened to the public).