Siemens 2009 Annual Report Download - page 218

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 Reports Supervisory Board /
Managing Board  Corporate Governance  Management’s discussion and analysis  Consolidated Financial Statements
 Consolidated Statements of Income  Consolidated Statements of Income
and Expense Recognized in Equity
 Consolidated Balance Sheets  Consolidated Statements of Cash Flow
conveyed by ownership of the majority of voting rights. Addi-
tionally, the Company consolidates special purpose entities
(SPE’s) when, based on the evaluation of the substance of the
relationship with Siemens, the Company concludes that it con-
trols the SPE. Associated companies are recorded in the Con-
solidated Financial Statements using the equity method of ac-
counting. Companies in which Siemens has joint control are
also recorded using the equity method.
Business combinations – All business combinations are ac-
counted for under the purchase method. The cost of an acqui-
sition is measured at the fair value of the assets given and lia-
bilities incurred or assumed at the date of exchange plus costs
directly attributable to the acquisition. Identifiable assets ac-
quired and liabilities assumed in a business combination (in-
cluding contingent liabilities) are measured initially at their
fair values at the acquisition date, irrespective of the extent of
any minority interest. The excess of the cost of acquisition
over the fair value of the Company ’s share of the identifiable
net assets acquired is recorded as goodwill.
Associated companies – Companies in which Siemens has
the ability to exercise significant influence over operating and
financial policies (generally through direct or indirect owner-
ship of 20% to 50% of the voting rights) are recorded in the
Consolidated Financial Statements using the equity method of
accounting and are initially recognized at cost. The excess of
Siemens’ initial investment in associated companies over
Siemens’ ownership percentage in the underlying net assets of
those companies is attributed to certain fair value adjustments
with the remaining portion recognized as goodwill. Goodwill
relating to the acquisition of associated companies is included
in the carrying amount of the investment and is not amortized
but is tested for impairment as part of the overall investment
in the associated company. Siemens’ share of its associated
companies’ post-acquisition profits or losses is recognized in
the income statement, and its share of post-acquisition move-
ments in equity that have not been recognized in the associ-
ates’ profit or loss is recognized directly in equity. The cumula-
tive post-acquisition movements are adjusted against the car-
rying amount of the investment in the associated company.
When Siemens’ share of losses in an associated company
equals or exceeds its interest in the associate, Siemens does
1 BASIS OF PRESENTATION
The accompanying Consolidated Financial Statements present
the operations of Siemens AG and its subsidiaries (the Com-
pany or Siemens). They are prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by
the European Union (EU) as well as with the additional require-
ments as set forth in section 315a(1) of the German Commer-
cial Code (HGB). The financial statements are also in accor-
dance with IFRS as issued by the IASB and applicable as of Sep-
tember 30, 2009. Certain pronouncements have been early
adopted, as described in Note 2.
Consolidated Financial Statements and Management’s Discus-
sion and Analysis as of September 30, 2009, prepared in accor-
dance with Par. 315a(1) of the HGB, are being filed with and
published in the German Electronic Federal Gazette (elek-
tronischer Bundesanzeiger).
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Siemens is a German based multinational
corporation with a balanced business portfolio of activities
predominantly in the field of electronics and electrical engi-
neering (for further information see Note 37).
A separate List of subsidiaries and associated companies pur-
suant to Par. 313(4) HGB will be submitted to the operator
of the electronic version of the German Electronic Federal
Gazette.
The Consolidated Financial Statements were authorised for
issue by the Managing Board on November 24, 2009.
2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The accounting policies set out below have been applied con-
sistently to all periods presented in these Consolidated Finan-
cial Statements.
Basis of consolidation – The Consolidated Financial State-
ments include the accounts of Siemens AG and its subsidiaries
which are directly or indirectly controlled. Control is generally
Notes