annual report - FIAT SpA

fair values of the assets transferred and liabilities assumed by the Group and the equity interests issued in exchange
for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at
that date, except for the following which are measured in accordance with the relevant standard:
� deferred tax assets and liabilities;
� assets and liabilities relating to employee benefit arrangements;
� liabilities or equity instruments relating to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the
acquiree;
� assets (or disposal groups) that are classified as held for sale.
Goodwill is measured as the excess of the aggregate of the consideration transferred in the business combination, the
amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed. If the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Non-controlling interest is initially measured either at fair value or at the non-controlling interest’s proportionate share
of the acquiree's identifiable net assets. The selection of the measurement method is made on a transaction-bytransaction
basis.
Any contingent consideration arrangement in the business combination is measured at its acquisition-date fair value
and included as part of the consideration transferred in the business combination in order to determine goodwill.
Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
recognised retrospectively, with corresponding adjustments to goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the ‘measurement period’ (which may not exceed
one year from the acquisition date) about facts and circumstances that existed as of the acquisition date.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured at its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss.
Changes in the equity interest in the acquiree that have been recognised in Other comprehensive income in prior
reporting periods are reclassified to profit or loss as if the interest had been disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete in the
consolidated financial statements. Those provisional amounts are adjusted during the measurement period to reflect
new information obtained about facts and circumstances that existed at the acquisition date which, if known, would
have affected the amounts recognised at that date.
Business combinations that took place prior to 1 January 2010 were accounted for in accordance with the previous
version of IFRS 3.
Intangible assets
Goodwill
Goodwill arising on business combinations is initially measured at cost as established at the acquisition date, as
defined in the above paragraph. Goodwill is not amortised, but is tested for impairment annually or more frequently if
events or changes in circumstances indicate that it might be impaired. After initial recognition, goodwill is measured at
cost less any accumulated impairment losses.
On disposal of part or whole of a business which was previously acquired and which gave rise to the recognition of
goodwill, the remaining amount of the related goodwill is included in the determination of the gain or loss on disposal.
In the context of IFRS First-time Adoption, the Group elected not to apply IFRS 3 – Business Combinations
retrospectively to the business combinations that occurred before 1 January 2004; as a consequence, goodwill arising
on acquisitions before the date of transition to IFRS has been retained at the previous Italian GAAP amounts, subject
to impairment testing at that date.
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
Fiat Group Consolidated Financial Statements at 31 December 2010 114