annual report - FIAT SpA

Assets and liabilities held for sale and Discontinued Operations
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only when
the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present
condition. When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and
liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of
whether the Group will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying
amounts and fair value less costs to sell.
Employee benefits
Pension plans
Employees of the Group participate in several defined benefit and/or defined contribution pension plans in accordance
with local conditions and practices in the countries in which the Group operates.
The Group's obligation to fund defined benefit pension plans and the annual cost recognised in the income statement
are determined on an actuarial basis using the projected unit credit method. The portion of net cumulative actuarial
gains and losses which exceeds the greater of 10% of the present value of the defined benefit obligation and 10% of
the fair value of plan assets at the end of the previous year is amortised over the average remaining service lives of
the employees (the “corridor approach”). In the context of IFRS First-time Adoption, the Group elected to recognise all
cumulative actuarial gains and losses that existed at 1 January 2004, even though it had decided to use the corridor
approach for subsequent actuarial gains and losses.
The post-employment benefit obligation recognised in the statement of financial position represents the present value
of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses, arising from the application
of the corridor method and unrecognised past service cost, reduced by the fair value of plan assets. Any net asset
resulting from this calculation is recognised at the lower of its amount and the total of any cumulative unrecognised
net actuarial losses and past service cost, and the present value of any economic benefits available in the form of
refunds from the plan or reductions in future contributions to the plan.
If changes are made to a plan that alter the benefits due for past service or if a new plan is introduced regarding past
service then past service costs are recognised in the income statement on a straight-line basis over the average
period remaining until the benefits become vested. If a change is made to a plan that significantly reduces the number
of employees who are members of the plan or that alters the conditions of the plan such that employees will no longer
be entitled to the same benefits for a significant part of their future service, or if such benefits will be reduced, the
profit or loss arising from such changes is immediately recognised in the income statement.
All other costs and income arising from the measurement of pension plan provisions are allocated to costs by function
in the income statement, except for interest cost on unfunded defined benefit plans which is reported as part of
Financial expenses.
Costs arising from defined contribution plans are recognised as an expense in the income statement as incurred.
Post-employment plans other than pensions
The Group provides certain post-employment defined benefits, mainly health care plans. The method of accounting
and the frequency of valuations are similar to those used for defined benefit pension plans.
The scheme underlying the Employee leaving entitlements in Italy of the Italian Group companies (the TFR) was
classified as a defined benefit plan until 31 December 2006. The legislation regarding this scheme and leading to this
classification was amended by Law no. 296 of 27 December 2006 (the “2007 Finance Law”) and subsequent decrees
and regulations issued in the first part of 2007. In view of these changes, and with specific reference to those
regarding companies with at least 50 employees, this scheme only continues to be classified as a defined benefit plan
in the consolidated financial statements for those benefits accruing up to 31 December 2006 (and not yet settled by
the balance sheet date), while after that date the scheme is classified as a defined contribution plan.
Equity compensation plans
The Group provides additional benefits to certain members of senior management and employees through equity
compensation plans (stock option plans and stock grants). In accordance with IFRS 2 – Share-based Payment, these
plans represent a component of recipient remuneration. The compensation expense, corresponding to the fair value of
the instruments at the grant date, is recognised in the income statement on a straight-line basis over the period from
the grant date to the vesting date, with the offsetting credit recognised directly in equity. Any subsequent changes to
Fiat Group Consolidated Financial Statements at 31 December 2010 119