Chrysler 2015 Annual Report Download - page 152

152 2015 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
Government grants
Government grants are recognized in the Consolidated Financial Statements when there is reasonable assurance of
the Group’s compliance with the conditions for receiving such grants and that the grants will be received. Government
grants are recognized as income over the periods necessary to match them with the related costs which they are
intended to offset.
The benefit of a government loan at a below-market rate of interest is treated for accounting purposes as a
government grant. The benefit of the below-market rate of interest is measured as the difference between the initial
carrying amount of the loan (fair value plus transaction costs) and the proceeds received, and it is accounted for in
accordance with the policies used for the recognition of government grants.
Taxes
Income taxes include all taxes based on the taxable profits of the Group. Current and deferred taxes are recognized
as a benefit or expense and are included in the Consolidated Income Statement for the period, except tax arising from
(i)a transaction or event which is recognized, in the same or a different period, either in Other comprehensive income/
(loss) or directly in Equity, or (ii)a business combination.
Deferred taxes are accounted for under the full liability method. Deferred tax liabilities are recognized for all taxable
temporary differences between the carrying amounts of assets or liabilities and their tax base, except to the extent that
the deferred tax liabilities arise from the initial recognition of goodwill or the initial recognition of an asset or liability in
a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit
nor taxable profit. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be utilized, unless
the deferred tax assets arise from the initial recognition of an asset or liability in a transaction that is not a business
combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the substantively enacted tax rates in the respective jurisdictions in
which the Group operates that are expected to apply to the period when the asset is realized or liability is settled.
The Group recognizes deferred tax liabilities associated with the existence of a subsidiary’s undistributed profits,
except when it is able to control the timing of the reversal of the temporary difference, and it is probable that this
temporary difference will not reverse in the foreseeable future. The Group recognizes deferred tax assets associated
with the deductible temporary differences on investments in subsidiaries only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary difference can be utilized.
Deferred tax assets relating to the carry-forward of unused tax losses and tax credits as well as those arising from
deductible temporary differences, are recognized to the extent that it is probable that future profits will be available
against which they can be utilized. The Group reassesses unrecognized deferred tax assets at the end of each year
and recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.
Current income taxes and deferred taxes are offset when they relate to the same taxation authority and there is a
legally enforceable right of offset. Other taxes not based on income, such as property taxes and capital taxes, are
included within Other income/(expenses).