Chrysler 2013 Annual Report Download - page 137

136 Consolidated
Financial Statements
at 31 December 2013
Notes
Consolidation of foreign entities
All assets and liabilities of foreign consolidated companies with a functional currency other than the Euro are translated using the exchange
rates in effect at the balance sheet date. Income and expenses are translated into Euro at the average exchange rate for the period. Translation
differences resulting from the application of this method are classified as Other comprehensive Income/(losses) until the disposal of the
investment. Average exchange rates for the period are used to translate the cash flows of foreign subsidiaries in preparing the Consolidated
statement of cash flows.
The goodwill, assets acquired and liabilities assumed arising from the acquisition of entities with a functional currency other than the Euro are
recognized in the functional currency and translated at the exchange rate at the acquisition date. These balances are translated at subsequent
balance sheet dates at relevant exchange rate.
The principal exchange rates used to translate into Euros the financial statements prepared in currencies other than the Euro were as follows:
Average 2013 At 31 December 2013 Average 2012 At 31 December 2012
U.S. Dollar 1.328 1.379 1.285 1.319
Brazilian Real 2.867 3.258 2.508 2.704
Chinese Renminbi 8.164 8.349 8.106 8.221
Serbian Dinar 113.096 114.642 113.120 113.718
Polish Zloty 4.197 4.154 4.185 4.074
Argentine Peso 7.263 8.988 5.836 6.478
Pound Sterling 0.849 0.834 0.811 0.816
Swiss Franc 1.231 1.228 1.205 1.207
Business Combinations
Business combinations are accounted for by applying the acquisition method of accounting, in accordance with IFRS 3 – Business
combinations. 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 any resulting gain or loss is recognized in Income statements under Gains/(losses) on the disposal of
investments. Changes in the equity interest in the acquiree that have been recognized in Other comprehensive income/(losses) in prior
reporting periods are reclassified to Income statement as if the interest had been disposed.
Intangible assets
Goodwill
Goodwill arising from business combinations is initially measured at cost as established on the acquisition date. Goodwill is not amortized,
but is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. After initial
recognition, goodwill is measured at cost less any accumulated impairment losses.
On the loss of control of a previously acquired entity, any outstanding goodwill balance is included in the determination of the gain or loss on
disposal.