Chrysler 2013 Annual Report Download - page 215

214 Consolidated
Financial Statements
at 31 December 2013
Notes
The item Advances on buy-back agreements refers to buy-back agreements entered into by the Group and comprises the price received for
the product recognized as an advance at the date of the sale, and subsequently, the repurchase price and the remaining lease installments
yet to be recognized.
Indirect tax payables includes taxes on commercial transactions accrued by the Brazilian subsidiary FIASA for which the company (as well
as a number of important industrial groups which operate in Brazil) is awaiting the decision by the Supreme Court regarding its claim alleging
double taxation. In March 2007, FIASA received a preliminary trial court decision allowing the payment of such tax on a taxable base consistent
with the company’s position. Since it is a preliminary decision and the amount may be required to be paid to the tax authorities at any time,
the difference between the tax payments as preliminary allowed and the full amount determined as required by the legislation still in force is
recognized as a current liability due between one and five years. Timing for the Supreme Court decision is not predictable.
Deferred income includes the revenues not yet recognized in relation to separately-priced extended warranties and service contracts offered
by Chrysler. These revenues will be recognized in the Income statement over the contract period in proportion to the costs expected to be
incurred based on historical information. In addition, at 31 December 2013, the item also include €214 million deferred income arising from the
donation of a land from the State of Pernambuco. This deferred income will be recognized in the Income statement starting from the entering
in to activity of the plant (see Note 15).
30. Fair value measurement
IFRS 13 establishes a hierarchy that categorizes into three levels the inputs to the valuation techniques used to measure fair value by giving
the highest priority to quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1 inputs) and the lowest priority to
unobservable inputs (level 3 inputs). In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized
within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the
fair value hierarchy at the lowest level input that is significant to the entire measurement.
Levels used in the hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets and liabilities that the Group can access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or
indirectly.
Level 3 inputs are unobservable inputs for the assets and liabilities.