Chrysler 2014 Annual Report Download - page 161

2014 | ANNUAL REPORT 159
Financial instruments
Presentation
Financial instruments held by the Group are presented in the Consolidated financial statements as described in the
following paragraphs.
Investments and other non-current financial assets comprise investments in unconsolidated companies and other
non-current financial assets (held-to-maturity securities, non-current loans and receivables and other non-current
available-for-sale financial assets).
Current financial assets, as defined in IAS 39 – Financial Instruments: Recognition and Measurement, include Trade
receivables, Receivables from financing activities, Current investments, Current securities and Other financial assets
(which include derivative financial instruments stated at fair value), as well as Cash and cash equivalents. Cash and
cash equivalents include cash at banks, units in money market funds and other money market securities, comprising
commercial paper and certificates of deposit, that are readily convertible into cash and are subject to an insignificant
risk of changes in value. Money market funds comprise investments in high quality, short-term, diversified financial
instruments which can generally be liquidated on demand. Current securities include short-term or marketable
securities which represent temporary investments of available funds and do not satisfy the requirements for being
classified as cash equivalents. Current securities include both available-for-sale and held-for-trading securities.
Financial liabilities comprise Debt and Other financial liabilities (which include derivative financial instruments stated at
fair value), Trade payables and Other current liabilities.
Measurement
Non-current financial assets other than Investments, as well as current financial assets and financial liabilities, are
accounted for in accordance with IAS 39 – Financial Instruments: Recognition and Measurement.
Current financial assets and held-to-maturity securities are recognized on the basis of the settlement date and, on
initial recognition, are measured at acquisition cost, including transaction costs. Subsequent to initial recognition,
available-for-sale and held-for-trading financial assets are measured at fair value. When market prices are not directly
available, the fair value of available-for-sale financial assets is measured using appropriate valuation techniques (e.g.
discounted cash flow analysis based on market information available at the balance sheet date).
Gains and losses on available-for-sale financial assets are recognized in Other comprehensive income/(loss) until the
financial asset is disposed of or is impaired. When the asset is disposed of, the cumulative gains or losses, including
those previously recognized in Other comprehensive income/(loss), are reclassified to the Consolidated income
statement for the period, within Financial income and expenses. When the asset is impaired, accumulated losses are
recognized in the Consolidated income statement. Gains and losses arising from changes in the fair value of held-for-
trading financial instruments are included in the Consolidated income statement for the period.
Loans and receivables which are not held by the Group for trading (loans and receivables originating in the ordinary
course of business), held-to-maturity securities and equity investments whose fair value cannot be determined reliably,
are measured, to the extent that they have a fixed term, at amortized cost, using the effective interest method. When
the financial assets do not have a fixed term, they are measured at acquisition cost. 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. Assessments are made regularly as to whether there is any objective evidence that a financial asset or group
of assets may be impaired. If any such evidence exists, any impairment loss is included in the Consolidated income
statement for the period.
Except for derivative instruments, financial liabilities are measured at amortized cost using the effective interest method.
Financial assets and liabilities hedged against changes in fair value (fair value hedges) are measured in accordance
with hedge accounting principles: gains and losses arising from remeasurement at fair value, due to changes in the
respective hedged risk, are recognized in the Consolidated income statement and are offset by the effective portion of
the loss or gain arising from remeasurement at fair value of the hedging instrument.