Siemens 2012 Annual Report Download - page 239

135 D. Consolidated Financial Statements 239 E. Additional Information
140 D. Consolidated Statements of Changes in Equity
142 D. Notes to Consolidated Financial Statements
232 D. Supervisory Board and Managing Board
136 D. Consolidated Statements of Income
137 D. Consolidated Statements of Comprehensive Income
138 D. Consolidated Statements of Financial Position
139 D. Consolidated Statements of Cash Flow

is reported separately from income and expenses from con-
tinuing operations; prior periods are presented on a compara-
ble basis. In the Consolidated Statements of Cash Flow, the
cash flows from discontinued operations are presented sepa-
rately from cash flows of continuing operations; prior periods
are presented on a comparable basis. The disclosures in the
Notes to the Consolidated Financial Statements outside
  ,    -
 that refer to the Consolidated Statements of Income and
the Consolidated Statements of Cash Flow generally relate to
continuing operations. Siemens reports discontinued opera-
tions separately in   ,   -
 . In order to present the financial effects
of a discontinued operation revenues and expenses arising
from intragroup transactions are eliminated except for those
revenues and expenses that are considered to continue after
the disposal of the discontinued operation. In any case no
profit or loss is recognized for intragroup transactions.
Siemens classifies a non-current asset or a disposal group as
held for disposal if its carrying amount will be recovered prin-
cipally through a sale transaction or through distribution to
shareholders rather than through continuing use. For this to
be the case, the asset or disposal group must be available for
immediate sale or distribution in its present condition subject
only to terms that are usual and customary for sales or distri-
butions of such assets or disposal groups and its sale or distri-
bution must be highly probable. The disclosures in Notes to
Consolidated Financial Statements outside   -
,     that refer to
the Consolidated Statements of Financial Position generally re-
late to assets that are not held for disposal. Siemens reports
non-current assets or disposal groups held for disposal sepa-
rately in   ,   
. Non-current assets classified as held for disposal
and disposal groups are measured at the lower of their carry-
ing amount and fair value less costs to sell, unless these items
presented in the disposal group are not part of the measure-
ment scope as defined in IFRS , Non-current Assets held for
Sale and Discontinued Operations.
Income taxes – The Company applies IAS  Income taxes.
Current taxes are calculated based on the profit (loss) of the
fiscal year and in accordance with local tax rules of the tax ju-
risdiction respectively. Expected and executed additional tax
payments respectively tax refunds for prior years are also tak-
en into account. Under the liability method, deferred tax as-
sets and liabilities are recognized for future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their re-
spective tax bases. The effect on deferred tax assets and liabili-
ties of a change in tax rates is recognized in the income state-
ment, unless related to items directly recognized in equity, in
the period the new laws are enacted or substantively enacted.
Deferred tax assets are recognized to the extent that it is prob-
able that future taxable income will be available against which
the deductible temporary differences, unused tax losses and
unused tax credits can be utilized.
Inventories – Inventories are valued at the lower of acquisi-
tion or production costs and net realizable value, costs being
generally determined on the basis of an average or first-in,
first-out method. Production costs comprise direct material
and labor and applicable manufacturing overheads, including
depreciation charges. Net realizable value is the estimated sell-
ing price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
Defined benefit plans – Siemens measures the entitlements
of the defined benefit plans by applying the projected unit
credit method. The approach reflects an actuarially calculated
net present value of the future benefit entitlement for services
already rendered. In determining the net present value of the
future benefit entitlement for service already rendered (De-
fined Benefit Obligation (DBO)), Siemens considers future
compensation and benefit increases, because the employee’s
final benefit entitlement at regular retirement age depends on
future compensation or benefit increases. For post-employ-
ment healthcare benefits, Siemens considers health care
trends in the actuarial valuations.
For unfunded plans, Siemens recognizes a pension liability equal
to the DBO adjusted by unrecognized past service cost. For fund-
ed plans, Siemens offsets the fair value of the plan assets with
the benefit obligations. Siemens recognizes the net amount, af-
ter adjustments for effects relating to unrecognized past service
cost and any asset ceiling, in line item Pension plans and similar
commitments or in line item Other current assets.
Actuarial gains and losses, resulting for example from an ad-
justment of the discount rate or from a difference between ac-
tual and expected return on plan assets, are recognized by
Siemens in the Consolidated Statements of Comprehensive In-
come in the year in which they occur. Those effects are record-
ed in full directly in equity, net of tax.
Provisions – A provision is recognized in the Statement of
Financial Position when the Company has a present legal or
constructive obligation as a result of a past event, it is probable
that an outflow of economic benefits will be required to settle
the obligation and a reliable estimate can be made of the
amount of the obligation. If the effect is material, provisions
are recognized at present value by discounting the expected
future cash flows at a pretax rate that reflects current market