Fiat Italian Gaap vs IFRS

Topics: International Financial Reporting Standards, Financial statements, Balance sheet Pages: 33 (3395 words) Published: November 3, 2014

IAS/IFRS First Time Adoption
March 30, 2005

This document was prepared to provide a general overview of the impacts of IAS/IFRS on the accounts of Fiat Group during the transition from Italian GAAP to IAS/IFRS
As provided for in IFRS 1 – First-time adoption of International Financial Reporting Standards – the information is prepared in accordance with IAS/IFRS published as of December 31, 2004 and applicable as of January 1, 2005

Information presented in this document is based on preliminary and unaudited data; as such, this information is subject to change

IFRS = International Financial Reporting Standards
IAS = International Accounting Standards
SIC = IAS Interpretation
IAS/IFRS First time adoption Mar 30, 2005 - slide 2


™ General framework
™ IAS/IFRS applied to Fiat
™ Going forward

IAS/IFRS First time adoption Mar 30, 2005 - slide 3

General framework – EU Regulation and Objectives of IAS/IFRS

™ European Parliament Regulation 1606 of July 19, 2002 requires adoption of IFRS for all EU listed companies starting January 1, 2005
¾ First IAS/IFRS annual report for fiscal year 2005 with 2004 comparatives
™ Main objective of IAS/IFRS is to develop a single set of high quality, understandable and enforceable global accounting standards to allow transparent and comparable information in financial reporting

IAS/IFRS First time adoption Mar 30, 2005 - slide 4

General framework – IAS/IFRS key principles
™ Economic substance over legal form
™ Limited use of alternative valuation criteria to historical cost, such as fair value (financial instruments) or present value (reserves) is required
™ Retrospective application of the new standards to opening equity as of January 1, 2004 to properly establish IFRS based data

IAS/IFRS First time adoption Mar 30, 2005 - slide 5

General framework – Implementation status at Fiat
™ Fiat will adopt IAS/IFRS for Consolidated Financial Statements as of January 1, 2005
™ First reporting period under new standards will be Q1 2005 with 2004 IAS/IFRS comparatives
™ Fiat SpA statutory 2005 financial statements will be prepared under Italian GAAP. IAS/IFRS adoption will become mandatory
in 2006

IAS/IFRS First time adoption Mar 30, 2005 - slide 6

IAS/IFRS applied to Fiat – Main differences
● Typically expensed when incurred

Development costs
Employee benefits - postemployment & long-term
Revenue recognition - vehicle
sales with buy-back commitment

● Capitalized and amortized over useful life

(generally from 5 to 10 years) if specific
capitalization requirements are met
● Operating expense
● Actuarial gains and losses deferred and

partially amortized over time ("Corridor
● Amortized over a period not exceeding

● Related interest cost classified in interest expense
● All cumulative actuarial gains and losses existing

at Jan 1, 2004 recognized against equity
● Not amortized

20 years
● Revenue recognition at time of initial sale

with specific provision for related
expected risks
● Sale recognition based on transfer of

legal title

Revenue recognition - other

● Accounted for as operating lease until the final

sale of used vehicle

● Sale recognition based on effective transfer of

significant risks and rewards associated with
● Previous gain reversed, assets reinstated in
Balance Sheet against financial debt

Sold receivables

● Typically off balance sheet

● Typically reinstated

Property, Plant and

● Include revaluation allowed or prescribed

● Historical cost

Start-up and similar charges

by law
● Deferred & amortized

● Positive fair value adjustments on "non


hedging derivatives" not recognized
● Banca Unione di Credito and Fiat Auto

Scope of Consolidation

● Expensed as incurred; issuance costs charged to

stake in spare parts...
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