Chrysler 2013 Annual Report Download - page 277

276 Fiat S.p.A.
Statutory Financial
Statements
at 31 December 2013
Notes
Cash and cash equivalents includes bank deposits, units in liquidity funds and other money market securities that are readily convertible into
cash and for which the risk of changes in value is insignificant.
Non-current debt includes liabilities related to financial guarantees. Financial guarantees are contracts where the Company undertakes to make
specific payments to a counterparty for losses incurred as a result of the failure of a borrower to meet its payment obligations for a given debt
instrument. The present value of any related fees receivable is recognized under other non-current financial assets.
Measurement
Investments in subsidiaries and associates are recognized at cost and adjusted for any impairment losses.
Any positive difference, arising on acquisition, between the purchase cost and fair value of net assets acquired in an investee company is
included in the carrying amount of the investment.
Investments in subsidiaries and associates are tested annually for impairment, or more frequently if evidence of impairment exists. Where an
impairment loss exists, it is recognized immediately through the income statement. If the Company’s share of losses of the investee exceeds
the carrying amount of the investment and if the Company has an obligation or intention to cover those losses, the investment is written down to
zero and a liability is recognized for the Company’s share of any additional losses. If an impairment loss is subsequently reversed, the increase
in carrying amount (up to a maximum of purchase cost) is recognized through the income statement.
Investments in other companies, which consists of non-current financial assets that are not held for trading (i.e., available-for-sale financial
assets), are initially measured at fair value. Any subsequent gains or losses resulting from changes in fair value determined by the market
price are recognized directly in equity until the investment is sold or an impairment loss is recognized. If an investment is sold, cumulative
gains or losses previously recognized in equity are recycled through profit and loss. If an impairment loss is recognized on the investment,
any accumulated losses recognized in equity are recycled through profit and loss. Investments in companies for which a market price is not
available are measured at cost and adjusted for any impairment losses.
Common shares of CNH Industrial (formerly Fiat Industrial) allocated to servicing the stock option and stock grant plans are linked to the
liability for share-based compensation (i.e., provisions for stock options and stock grants) and are measured at fair value through profit or loss
consistent with the valuation of that liability.
Other financial assets, which the Company intends to hold to maturity, are initially recognized on the settlement date at purchase cost
(considered representative of their fair value) which, with the exception of held-for-trading financial assets, is inclusive of transaction costs.
Subsequent measurement is at amortized cost using the effective interest method.
Other non-current assets, trade receivables, current financial receivables and other current receivables, excluding those based on a
derivative financial instrument, as well as all other unquoted financial assets whose fair value cannot be reliably determined, are measured at
amortized cost using the effective interest method, if they have a fixed term, or at cost, if they have no fixed term. Receivables with maturities
of over one year which bear no interest or an interest rate significantly lower than market rates are discounted using market rates.
Regular assessments are made to determine whether there is objective evidence that financial assets, separately or within a group of assets,
have been impaired. Where such evidence exists, an impairment loss is recognized in the income statement for the period.
Non-current debt, other non-current liabilities, trade payables, current debt and other debt are initially recognized at fair value (normally
represented by the cost of the transaction from which the liability arises), in addition to any transaction costs.