Chrysler 2014 Annual Report Download - page 159

2014 | ANNUAL REPORT 157
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 the Consolidated income
statement. Changes in the equity interest in the acquiree that have been recognized in Other comprehensive
income/(loss) in prior reporting periods are reclassified to the Consolidated income statement as if the equity
interest had been disposed.
Intangible assets
Goodwill
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.
Development costs
Development costs for vehicle project production and related components, engines and production systems are
recognized as an asset if, and only if, both of the following conditions under IAS 38 – Intangible assets are met: that
development costs can be measured reliably and that the technical feasibility of the product, volumes and pricing
support the view that the development expenditure will generate future economic benefits. Capitalized development
costs include all direct and indirect costs that may be directly attributed to the development process.
Capitalized development costs are amortized on a straight-line basis from the start of production over the expected
life cycle of the models (generally 5-6 years) or powertrains developed (generally 10-12 years). All other development
costs are expensed as incurred.
Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives consist principally of brands which have no legal, contractual, competitive,
economic, or other factors that limit their useful lives. Intangible assets with indefinite useful lives are not amortized, but
are tested for impairment annually or more frequently whenever there is an indication that the asset may be impaired,
by comparing the carrying amount with the recoverable amount.
Property, plant and equipment
Cost
Property, plant and equipment is initially recognized at cost which comprises the purchase price, any costs directly
attributable to bringing the assets to the location and condition necessary to be capable of operating in the manner
intended by management and any initial estimate of the costs of dismantling and removing the item and restoring
the site on which it is located. Self-constructed assets are initially recognized at production cost. Subsequent
expenditures and the cost of replacing parts of an asset are capitalized only if they increase the future economic
benefits embodied in that asset. All other expenditures are expensed as incurred. When such replacement costs are
capitalized, the carrying amount of the parts that are replaced is recognized in the Consolidated income statement.
Assets held under finance leases, which provide the Group with substantially all the risks and rewards of ownership, are
recognized as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments.
The corresponding liability to the lessor is included in the Consolidated statement of position within Debt. The assets are
depreciated by the method and at the rates indicated below depending on the nature of the leased assets.
Leases under which the lessor retains substantially all the risks and rewards of ownership of the leased assets are
classified as operating leases. Operating lease expenditures are expensed on a straight-line basis over the lease terms.