Siemens 2012 Annual Report Download - page 241

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

Loans and receivables – Financial assets classified as loans
and receivables are measured at amortized cost using the ef-
fective interest method less any impairment losses. Impair-
ment losses on trade and other receivables are recognized us-
ing separate allowance accounts. Loans and receivables bear-
ing no or lower interest rates compared to market rates with a
maturity of more than one year are discounted.
Financial liabilities – Siemens measures financial liabilities,
except for derivative financial instruments, at amortized cost
using the effective interest method.
Derivative financial instruments – Derivative financial in-
struments, such as foreign currency exchange contracts and
interest rate swap contracts, are measured at fair value. Deriv-
ative financial instruments are classified as held for trading un-
less they are designated as hedging instruments, for which
hedge accounting is applied. Changes in the fair value of deriv-
ative financial instruments are recognized periodically either
in net income or, in the case of a cash flow hedge, in line item
Other comprehensive income, net of tax (applicable deferred
income taxes). Certain derivative instruments embedded in
host contracts are also accounted for separately as derivatives.
Fair value hedges – The carrying amount of the hedged item
is adjusted by the gain or loss attributable to the hedged risk.
Where an unrecognized firm commitment is designated as
hedged item, the subsequent cumulative change in its fair val-
ue is recognized as a separate financial asset or liability with
corresponding gain or loss recognized in net income.
For hedged items carried at amortized cost, the adjustment is
amortized until maturity of the hedged item. For hedged firm
commitments the initial carrying amount of the assets or liabili-
ties that result from meeting the firm commitments are adjust-
ed to include the cumulative changes in the fair value that were
previously recognized as separate financial assets or liabilities.
Cash flow hedges – The effective portion of changes in the fair
value of derivative instruments designated as cash flow hedges
are recognized in line item Other comprehensive income, net of
tax (applicable deferred income taxes), and any ineffective
portion is recognized immediately in net income. Amounts accu-
mulated in equity are reclassified into net income in the same
periods in which the hedged item affects net income.
Share-based payment – IFRS , Share-based payment, distin-
guishes between cash-settled and equity-settled share-based
payment transactions. For both types, the fair value is mea-
sured at grant date and compensation expense is recognized
over the vesting period during which the employees become
unconditionally entitled to the awards granted. Cash-settled
awards are re-measured at fair value at the end of each report-
ing period and upon settlement. Siemens uses an option pric-
ing model to determine the fair value of stock options. The fair
value of other share-based awards, such as stock awards,
matching shares, and shares granted under the Jubilee Share
Program, is determined as the market price of Siemens shares,
considering dividends during the vesting period the grantees
are not entitled to and market conditions and non-vesting con-
ditions, if applicable.
Prior-year information – The presentation of certain prior-
year information has been reclassified to conform to the current
year presentation.
  

In October , the IASB issued amendments to IFRS , Finan-
cial Instruments: Disclosures, which enhance the disclosure
requirements, hence maintain the derecognition model of IAS
. The amendments increase the disclosure requirements for
transfers of financial assets where the transferor retains con-
tinuing involvement in the transferred asset; additional disclo-
sures are required if a disproportionate amount of transfer
transactions are undertaken around the end of a reporting pe-
riod. The amendment is applicable for annual reporting peri-
ods beginning on or after July , ; early adoption is permit-
ted. The adoption of IFRS  did not result in a material impact
on the Company ’s Consolidated Financial Statements.
In June , the IASB issued Presentation of Items of Other
Comprehensive Income (Amendments to IAS ), which re-
quires the grouping of items presented in other comprehen-
sive income on the basis of whether they are potentially reclas-
sifiable to profit or loss subsequently. The Company early
adopted the amendment as of September , .
  ,
  
The following pronouncements, issued by the IASB, are not yet
effective and have not yet been adopted by the Company:
In December , the IASB issued amendments to IAS ,
Financial Instruments: Presentation and IFRS , Financial In-
struments: Disclosures regarding offsetting of financial assets
and financial liabilities. The amendment to IAS  clarifies the
existing offsetting rules and is effective for reporting periods
beginning on or after January , , early application is per-
mitted, however it requires the application of the amendments
to IFRS . These amendments to IFRS  expand the disclosure
requirements for financial assets and financial liabilities offset
in the statements of financial position including netting agree-
ments where netting is subject to certain future events. This