Chrysler 2007 Annual Report Download - page 112

Fiat Group Consolidated Financial Statements at December 31, 2007 - Notes 111
case and claim, the jurisdiction and the differences in
applicable law. In the normal course of business management
consults with legal counsel and certain other experts on
matter related to litigation and taxes. The Group accrues a
liability when it is determined that an adverse outcome is
probable and the amount of the loss can be reasonably
estimated. In the event an adverse outcome is possible or an
estimate is not determinable, the matter is disclosed.
Accounting principles, amendments and
interpretations adopted from January 1, 2007
On March 3, 2006, the IFRIC issued interpretation IFRIC 9 –
Reassessment of Embedded Derivatives , which requires an
entity to assess whether an embedded derivative is required
to be separated from the host contract and accounted for as
a derivative when the entity first becomes a party to the
contract. Subsequent reassessment is prohibited unless there
is a change in the terms of the contract that significantly
modifies the cash flows that otherwise would be required
under the contract, in which case reassessment is required.
No significant effect arose from the adoption of this
interpretation.
On November 2, 2006, the IFRIC issued IFRIC Interpretation
11 –
IFRS 2 - Group and Treasury Share Transactions in order
to address the accounting treatment of share-based payment
arrangements under which an entity chooses or is required to
buy treasury stock to satisfy its obligations and those under
which the employees of one Group company are granted
rights to the shares of another (such as the parent company).
The Group early adopted this interpretation and applied it to
the stock option plan for which rights were granted in
November 2006. No significant effects arose on the adoption
of the interpretation.
In August 2005, the IASB issued IFRS 7 –
Financial
Instruments: Disclosures
and a complementary amendment
to IAS 1 –
Presentation of Financial Statements – Capital
Disclosures, effective from January 1, 2007. IFRS 7 requires
disclosures to be provided on financial instruments and was
early adopted by the Group for the annual period beginning
January 1, 2005. The amendment to IAS 1 introduces
requirements for disclosures about an entity’s capital,
without any effect on classification or measurement of
capital items. The Group adopted this amendment for the
annual period beginning January 1, 2007.
Interpretations effective from January 1, 2007 but
not applicable to the Group
The following interpretations, effective for the annual period
beginning January 1, 2007, relate to matters that are not
applicable to the Group:
■ IFRIC 7 – Applying the Restatement approach under IAS 29
– Financial reporting in Hyperinflationary economies;
■ IFRIC 8 – Scope of IFRS 2 .
Accounting principles, amendments and
interpretations not applicable and not early
adopted by the Group
On November 30, 2006, the IASB issued the IFRS 8 –
Operating
Segments
that will become effective for the Group on January
1, 2009 and which will replace IAS 14 –
Segment Reporting
from that date. The new standard requires the information
provided in segment reporting to be based upon the
components of the entity that management uses to make
decisions about operational matters. The standard requires
these operating segments to be identified on the basis of
internal reports that are regularly reviewed by an entity’s
management in order to allocate resources to the segment and
assess its performance. Adopting this standard will have no
effect on the measurement of items in the financial statements.
On March 29, 2007 the IASB issued a revised version of IAS
23 –
Borrowing costs . The standard shall be applied for
annual period beginning after 1 January, 2009. The main
change from the previous version is the removal of the
option of immediately recognising as an expense borrowing
costs that relate to assets that take a substantial period of
time to get ready for use or sale. The standard shall be
applied to borrowing costs relating to qualifying assets for
which the commencement date for capitalisation is on or
after the 1 January 2009. At the date of this report this
document has not yet been endorsed by the European Union.