Case study FIAT

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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…show more content…
| | |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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