Siemens 2013 Annual Report Download - page 262

92 A. To our Shareholders 117 B. Corporate Governance 155 C. Combined Management Report
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NOTE  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 requirements 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).
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
Consolidated Financial Statements are generally prepared on
the historical cost basis, except as stated in NOTE  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES.
NOTE  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
controls the SPE. To determine when the Company should con-
solidate based on substance, Siemens considers the circum-
stances 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 priv-
ileges 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 account-
ed for under the acquisition method. Siemens as the acquirer
an
d 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 rec-
ognizes a gain or loss for the pre-existing relationship. The
cost of an acquisition is measured at the fair value of the as-
sets given and liabilities incurred or assumed at the date of ex-
change. 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 lia-
bility 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. Acquisi-
tion-related costs are expensed in the period incurred. Identifi-
able assets acquired and liabilities assumed in a business com-
bination (including contingent liabilities) are measured
initially at their fair values at the acquisition date, irrespective
of the extent of any non-controlling interest. Uniform account-
ing policies are applied. Non-controlling interests may be mea-
sured at their fair value (full goodwill method) or at the pro-
portional fair value of assets acquired and liabilities assumed
(partial goodwill method). After initial recognition non-con-
trolling interests may show a deficit balance since both profits
and losses are allocated to the shareholders based on their eq-
uity interests. In business combinations achieved in stages,
any previously held equity interest in the acquiree is remea-
sured to its acquisition date fair value. If there is no loss of
control, transactions with non-controlling interests are ac-
counted 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-con-
trolling interests the Company distinguishes whether the pre-
requisites for the transfer of present ownership interest are
fulfilled at the balance sheet date. Provided that the Company
is not the beneficial owner of the shares underlying the put
option, the exercise 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 partici-
pate in profits and losses during the reporting period.
Associated companies and jointly controlled entities –
Companies in which Siemens has the ability to exercise signifi-
cant influence over operating and financial policies (generally
through direct or indirect ownership of % to % of the vot-
ing rights) and jointly controlled entities are recorded in the