Siemens 2007 Annual Report Download - page 216

216 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
The exchange rates of the signifi cant currencies of non-euro countries used in
the preparation of the Consolidated Financial Statements were as follows:
Revenue recognition – Revenue is recognized for product sales when persua-
sive evidence of an arrangement exists, delivery has occurred or services have
been rendered, the risks and rewards of ownership have been transferred to the
customer, the amount of revenue can be measured reliably, and collection of the
related receivable is reasonably assured. If product sales are subject to customer
acceptance, revenues are not recognized until customer acceptance occurs. Reve-
nues from construction-type projects are generally recognized under the percent-
age-of-completion method, based on the percentage of costs to date compared to
the total estimated contract costs, contractual milestones or performance. Reve-
nues from service transactions are recognized as services are performed. For
long-term service contracts, revenues are recognized on a straight-line basis over
the term of the contract or, if the performance pattern is other than straight-line,
as the services are provided. Revenue from software arrangements is recognized
at the time persuasive evidence of an arrangement exists, delivery has occurred,
the amount of revenue can be measured reliably and collectibility is probable.
Revenue from maintenance, unspecifi ed upgrades or enhancements and technical
support is allocated using the residual value method and is recognized over the
period such items are delivered. If an arrangement to deliver software requires
signifi cant production, modifi cation, or customization of software, the entire
arrangement is accounted for under the percentage-of-completion method. Oper-
ating lease income for equipment rentals is recognized on a straight-line basis
over the lease term. Interest is recognized using the effective interest method.
Dividends are recognized when the right to receive payment is established. Royal-
ties are recognized on an accrual basis in accordance with the substance of the
relevant agreement.
Sales of goods and services sometimes involve the provision of multiple ele-
ments. In these cases, the Company determines whether the contract or arrange-
ment contains more than one unit of accounting. An arrangement is separated if
(1) the delivered element(s) has value to the customer on a stand-alone basis,
(2) there is objective and reliable evidence of the fair value of the undelivered
element(s) and (3), if the arrangement includes a general right of return relative
to the delivered element(s), delivery or performance of the undelivered element(s)
is considered probable and substantially in the control of the Company. If all
Year-end exchange
rate 1 € quoted into
currencies specifi ed
below
September 30,
Annual average
rate 1 € quoted into
currencies specifi ed
below
Fiscal year
Currency ISO Code 2007 2006 2007 2006
British pound GBP 0.697 0.678 0.676 0.685
U.S. Dollar USD 1.418 1.266 1.333 1.230