Chrysler 2008 Annual Report Download - page 112

Fiat Group Consolidated Financial Statements at 31 December 2008 111
Development costs
Development costs for vehicle project production (cars, trucks,
buses, agricultural and construction equipment, related
components, engines, and production systems) are recognised
as an asset if and only if both of the following conditions are
met: that development costs can be measured reliably and that
technical feasibility of the product, volumes and pricing support
the view that the development expenditure will generate future
economic benefits. Capitalised development costs include all
direct and indirect costs that could be directly attributable to
the development process. Capitalised development costs are
amortised on a systematic basis from the start of production of
the related product over the product‘s estimated life, as follows:
N° of years
Cars 4 - 5
Trucks and Buses 8
Agricultural and Construction Equipment 5
Engines 8 - 10
Components and Production Systems 3 - 5
All other development costs are expensed as incurred.
Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives consist principally
of acquired trademarks which have no legal, contractual,
competitive, economic, or other factors that limit their useful
lives. Intangible assets with indefinite useful lives are not
amortised, but are tested for impairment annually or more
frequently whenever there is an indication that the asset may
be impaired.
Other intangible assets
Other purchased and internally-generated intangible assets are
recognised as assets in accordance with IAS 38 –
Intangible
Assets
, where it is probable that the use of the asset will
generate future economic benefits and where the costs of the
asset can be determined reliably.
Such assets are measured at purchase or manufacturing cost
and amortised on a straight-line basis over their estimated
useful lives, if these assets have finite useful lives.
Other intangible assets acquired as part of an acquisition of a
business are capitalised separately from goodwill if their fair
value can be measured reliably.
Property, plant and equipment
Cost
Property, plant and equipment are stated at acquisition or
production cost and are not revalued.
Subsequent expenditures and the cost of replacing parts of an
asset are capitalised only if they increase the future economic
benefits embodied in that asset. All other expenditures are
expensed as incurred. When such replacement costs are
capitalised, the carrying amount of the parts that are replaced
is recognised in the income statement.
Property, plant and equipment also include vehicles sold with
a buy-back commitment, which are recognised according to the
method described in the paragraph Revenue recognition if the
buy-back agreement originates from the Trucks and Commercial
Vehicles Sector.
Borrowing costs are recognised as an expense in the period
in which they are incurred.
Assets held under finance leases, which provide the Group
with substantially all the risks and rewards of ownership, are
recognised 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
financial statement as a debt. The assets are depreciated by the
method and at the rates indicated below.
Leases where the lessor retains substantially all the risks and
rewards of ownership of the assets are classified as operating
leases. Operating lease expenditures are expensed on a
straight-line basis over the lease terms.
Depreciation
Depreciation is calculated on a straight-line basis over the
estimated useful life of the assets as follows:
Depreciation rates
Buildings 2.5% - 10%
Plant and machinery 5% - 20%
Industrial and commercial equipment 15% - 25%
Other assets 10% - 33%
Land is not depreciated.