Siemens 2012 Annual Report Download - page 234

1 A. To our Shareholders 49 C. Combined Management Report 21 B. Corporate Governance
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  Basis of presentation
The accompanying Consolidated Financial Statements present
the operations of Siemens AG with registered offices in Berlin
and Munich, Germany, and its subsidiaries (the Company or
Siemens). They have been prepared in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by
the European Union as well as with the additional require-
ments set forth in Section a () of the German Commercial
Code (HGB). The financial statements are also in accordance
with IFRS as issued by the International Accounting Standards
Board (IASB).
Consolidated Financial Statements and Group Management
Report as of September , , prepared in accordance with
Section a () of the HGB are being filed with and published
in the German Electronic Federal Gazette (elektronischer
Bundesanzeiger).
Siemens prepares and reports its Consolidated Financial State-
ments in euros (€). Due to rounding, numbers presented may
not add up precisely to totals provided.
Siemens is a German based multinational corporation with a
business portfolio of activities predominantly in the field of
electronics and electrical engineering.
The Consolidated Financial Statements were authorised for
issue by the Managing Board on November , . The Con-
solidated Financial Statements are generally prepared on the
historical cost basis, except as stated in    
  .
  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
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. To determine when the Company should consoli-
date based on substance, Siemens considers the circumstanc-
es listed in SIC-. as additional indicators regarding a
relationship in which Siemens controls an SPE. Siemens looks
at these SIC-. circumstances as indicators and always privi-
leges an analysis of individual facts and circumstances on a
case-by-case basis. Associated companies are recorded in the
Consolidated Financial Statements using the equity method of
accounting. Companies in which Siemens has joint control are
also recorded using the equity method.
Business combinations – Business combinations are ac-
counted for under the acquisition method. Siemens as the
acquirer and the acquiree may have a relationship that existed
before they contemplated the business combination, referred
to as a pre-existing relationship. If the business combination
in effect settles a pre-existing relationship, Siemens as the
acquirer recognizes a gain or loss for the pre-existing relation-
ship. The cost of an acquisition is measured at the fair value of
the assets given and liabilities incurred or assumed at the date
of exchange. Any contingent consideration to be transferred
by Siemens as the acquirer will be recognized at fair value at
the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or
liability will be recognized either in profit or loss or as a change
to other comprehensive income. If the contingent consider-
ation is classified as equity, it will not be remeasured; subse-
quent settlement is accounted for within equity. Acquisition-
related costs are expensed in the period incurred. Identifiable
assets acquired and liabilities assumed in a business combina-
tion (including contingent liabilities) are measured initially at
their fair values at the acquisition date, irrespective of the ex-
tent of any non-controlling interest. Uniform accounting poli-
cies are applied. Non-controlling interests may be measured at
their fair value (full goodwill method) or at the proportional
fair value of assets acquired and liabilities assumed (partial
goodwill method). After initial recognition non-controlling
interests may show a deficit balance since both profits and
losses are allocated to the shareholders based on their equity
interests. In business combinations achieved in stages, any
previously held equity interest in the acquiree is remeasured to
its acquisition date fair value. If there is no loss of control,
transactions with non-controlling interests are accounted for
as equity transactions not affecting profit and loss. At the date
control is lost, any retained equity interests are remeasured to
fair value. In case of a written put on non-controlling interests
the Company distinguishes whether the prerequisites for the
transfer of present ownership interest are fulfilled at the bal-
ance sheet date. Provided that the Company is not the benefi-
cial owner of the shares underlying the put option, the exer-
cise of the put option will be assumed at each balance sheet
date and treated as equity transaction between shareholders
with the recognition of a purchase liability at the respective
exercise price. The non-controlling interests participate in
profits and losses during the reporting period.