Case study FIAT

1672 Words May 17th, 2015 7 Pages
Case study: FIAT GROUP’S FIRST-TIME ADOPTION OF IFRS

Question 1: What is Fiat’s key accounting policies? Which of Fiat’s key accounting policies are affected by the adoption of IFRS?

a. Fiat’s key accounting policies:

The Fiat Group has a tendency of engaging in financing accountings mechanism, selling a significant part of its finance, trade and tax receivables through either securitization programs or factoring transactions

b. Fiat’s key accounting policies are affected by the adoption of IFRS:

Three accounting changes by adoption of IFRS are related to Fiat’s critical accounting policies:

- The change to capitalization of development expenditures

- The change in the recognition of margins on sales with buy-back
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|Revenue recognition - Other| The recognition of disposals is based primarily on| The transaction is not recognized as the sale when|
| |legal and contractual form (transfer of legal title). |risk and rewards are not substantially transferred to |
| | |the buyer and the seller maintains a continuous |
| | |involvement in the operations or assets being sold. |
|Scope of consolidation | The subsidiary B.U.C. (Banca Unione de Credito) | B.U.C. is included in the scope of consolidation. |
| |was excluded from the scope of consolidation as it had |A Special Purpose Entity (SPE) shall be consolidated |
| |dissimilar activities, and was accounted for using the |when the substance of the relationship between an |
| |equity method. |entity and the SPE indicates that the SPE is controlled|
| |Investments that are not controlled on a legal basis or|by that entity. |
| |a de facto basis determined considering voting rights
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