Chrysler 2013 Annual Report Download - page 279

278 Fiat S.p.A.
Statutory Financial
Statements
at 31 December 2013
Notes
Inventory
Inventory consists of contract work in progress related, in particular, to long-term construction contracts between Fiat S.p.A. and Treno Alta
Velocità – T.A.V. S.p.A. (merged into Rete Ferroviaria Italiana S.p.A. from 31 December 2010) under which Fiat S.p.A. as general contractor
coordinates, organizes and manages the work.
Work in progress refers to activities carried out directly and is recognized through measurement of the total contract income on a percentage
completion basis, with the incremental portion of the work performed to date being recognized in the period. The cost-to-cost method is used
to determine the percentage of completion of a contract (by dividing the costs incurred by the total costs forecast for the whole construction).
Any losses expected to be incurred on contracts are fully recognized in the income statement and as a reduction in contract work in progress
when they become known.
Any advances received from customers for services performed are presented as a reduction in inventory. If the value of advances received
exceeds inventory, any excess is recognized as advances under other debt.
Transfer of receivables
The Company derecognizes receivables when, and only when, it no longer has the contractual right to the cash flows from an asset, or the
receivable is transferred. When the Company transfers a receivable:
if it transfers substantially all the risks and rewards of ownership, it derecognizes the receivable and recognizes any rights and obligations
created or retained in the transfer separately as assets or liabilities
if it retains substantially all the risks and rewards of ownership of the receivable, it continues to recognize the receivable
if it neither transfers nor retains substantially all the risks and rewards of ownership of the receivable, it determines whether it has retained
control of the receivable. In this case:
if the Company has not maintained control, it derecognizes the receivable and recognizes separately as assets and liabilities any rights
and obligations created or retained in the transfer
if the Company has retained control, it continues to recognize the receivable to the extent of its continuing involvement in the receivable
On derecognition of a receivable, the difference between the carrying amount of the receivable and the consideration received or receivable
for the transfer of the receivable is recognized in profit or loss.
Assets held for sale
This item includes non-current assets (or assets included in disposal groups) whose carrying amount will be recovered principally through a
sale transaction rather than through continuing use. Assets held for sale (or disposal groups) are measured at the lower of their carrying amount
and fair value less disposal costs.
Employee benefits
Defined contribution plans
Contributions to defined contribution plans are recognized through profit or loss in the period in which the benefit is earned.