Siemens 2007 Annual Report Download - page 222

222 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
Cash fl ow hedges – The effective portion of changes in the fair value of deriva-
tive instruments designated as cash fl ow hedges are recognized in Other compo-
nents of equity, net of applicable deferred income taxes, and any ineffective por-
tion is recognized immediately in net income. Amounts accumulated in equity are
reclassifi ed into net income in the same periods in which the hedged item affects
net income.
See Note 31, Derivative fi nancial instruments and hedging activities for further
information.
Share-based payment – As permitted under IFRS 1, First-time Adoption of
International Financial Reporting Standards, IFRS 2, Share-based Payment has not
been retrospectively applied to all share-based payment awards. This exemption
has been applied for all equity awards which were granted prior to November 7,
2002, as well as those equity awards granted prior to October 1, 2003, which
vested before January 1, 2005. All such equity awards exempted from IFRS 2 con-
tinue to be accounted for under the intrinsic value approach. IFRS 2 distinguishes
between cash-settled and equity-settled share-based payment transactions. For
both types, the fair value is measured at grant date and the compensation expense
is allocated over the period during which the employees become unconditionally
entitled to the awards. Cash-settled awards are remeasured at fair value on each
reporting date until the award is settled. Siemens uses an option pricing model to
determine the fair value of its share-based payment plans. See Note 33 for further
information on share-based payment transactions.
Initial application of standards and interpretations in fi scal 2007
For information on the adoption of IFRS 8, Operating Segments, in fi scal 2007
please refer to Notes 1 and 36.
Standards and interpretations issued but not yet adopted
In November 2006, the IFRIC issued IFRIC Interpretation 12, Service Concession
Arrangements, to provide guidance to private sector entities on certain recogni-
tion and measurement issues that arise in accounting for public-to-private service
concession arrangements. Service concession arrangements are arrangements
whereby a government or other body grants contracts for the supply of public ser-
vices (e.g. roads, energy distribution, transportation) to private operators. This
Interpretation applies to public-to-private service concession arrangements if
(a) the grantor controls or regulates what services the operator must provide with
the infrastructure, to whom it must provide them, and at what price; and (b) the
grantor controls – through ownership, benefi cial entitlement or otherwise – any
signifi cant residual interest in the infrastructure at the end of the term of the
arrangement. Control of the asset remains in public hands but the private sector
operator is responsible for construction activities, as well as for operating and
maintaining the public sector infrastructure. The operator does not recognize the
infrastructure as its property, plant and equipment if the infrastructure is exist-
ing infrastructure of the grantor, or is infrastructure constructed or purchased
by the operator as part of the service arrangement. The operator recognizes
either a fi nancial asset or an intangible asset, or both, as compensation for any
construction services that it provides. Any concession arrangements within the