Annual Report 2010 - Enel.com

esposibilities, and their close relatives, of Enel SpA and
the companies over which it exercises direct, indirect or
joint control and over which it exercises a significant influence.
The management with strategic responsibilities are
those persons who have the power and direct or indirect
responsibility for the planning, management and control
of the activities of the company. They include company
directors.
Subsidiaries
Subsidiaries comprise those entities for which the Group
has the direct or indirect power to determine their financial
and operating policies for the purposes of obtaining
the benefits of their activities. In assessing the existence
of a situation of control, account is also taken of potential
voting rights that are effectively exercisable or convertible.
The figures of the subsidiaries are consolidated on a full
line-by-line basis as from the date control is acquired until
such control ceases.
The acquisition of an additional stake in subsidiaries and
the sale of holdings that do not result in the loss of control
are considered transactions between owners. As such, the
accounting effects of these transactions are recognized
directly in consolidated equity.
Conversely, where a controlling interest is divested, any
capital gain (or loss) on the sale and the effects of the remeasurement
to fair value of the residual interest as at the
sale date shall be recognized through profit or loss.
Special purpose entities
The Group consolidates a special purpose entity (SPE)
when it exercises de facto control over such entity. Control
is achieved if in substance the Group obtains the majority
of the benefits produced by the SPE and supports the
majority of the remaining risks or risks of ownership of the
SPE, even if it does not own an equity interest in such entity.
Associated companies
156 Enel Annual Report 2010 Consolidated financial statements
Associated companies comprise those entities in which
the Group has a significant influence. Potential voting
rights that are effectively exercisable or convertible are
also taken into consideration in determining the existence
of significant influence.
These investments are initially recognized at cost and are
subsequently measured using the equity method, allocating
any difference between the cost of the equity investment
and the share in the net fair value of the assets,
liabilities and identifiable contingent liabilities of the associated
company in an analogous manner to the treatment
of business combinations. The Group’s share of profit or
loss is recognized in the consolidated financial statements
from the date on which it acquires the significant influence
over the entity until such influence ceases.
Should the Group’s share of the loss for the period exceed
the carrying amount of the equity investment, the latter
is impaired and any excess recognized in a provision if the
Group has a commitment to meet legal or constructive obligations
of the associate or in any case to cover its losses.
Where an interest is divested and as a result the Group
no longer exercises a significant influence, any capital gain
(or loss) on the sale and the effects of the remeasurement
to fair value of the residual interest as at the sale date shall
be recognized through profit or loss.
Joint ventures
Interests in joint ventures – enterprises over whose economic
activities the Group exercises joint control with
other entities – are consolidated using the proportionate
method. The Group recognizes its share of the assets, liabilities,
revenues and expenses on a line-by-line basis
in proportion to the Group’s share in the entity from the
date on which joint control is acquired until such control
ceases. The following table reports the contribution of the
main joint ventures to the aggregates in the consolidated
financial statements: