Siemens 2013 Annual Report Download - page 263

253 D. Consolidated Financial Statements 357 E. Additional Information
254 D. Consolidated Statements of Income
255 D. Consolidated Statements of Comprehensive Income
256 D. Consolidated Statements of Financial Position
257 D. Consolidated Statements of Cash Flows
258 D. Consolidated Statements of Changes in Equity
260 D. Notes to Consolidated Financial Statements
348 D. Supervisory Board and Managing Board

Consolidated Financial Statements using the equity method of
accounting and are initially recognized at cost. The following
policies equally apply to associated companies and jointly con-
trolled entities. Where necessary, adjustments are made to
bring the accounting policies in line with those of Siemens.
The excess of Siemens’ initial investment in associated compa-
nies 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 good-
will. Goodwill relating to the acquisition of associated compa-
nies 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
Consolidated Statements of Income, and
its share of post-acquisition movements in equity that have not
been recognized in the associates’ profit or loss is recognized
directly in equity. The cumulative post-acquisition movements
are adjusted against the carrying amount of the investment in
the associated company. When Siemens’ share of losses in an
associated company equals or exceeds its interest in the associ-
ate, Siemens does not recognize further losses, unless it incurs
obligations or makes payments on behalf of the associate. The
interest in an associate is the carrying amount of the invest-
ment in the associate together with any long-term interests
that, in substance, form part of Siemens’ net investment in the
associate. Intercompany results arising from transactions be-
tween Siemens and its associated companies are eliminated to
the extent of Siemens’ interest in the associated company.
Siemens determines at each reporting date whether there is
any objective evidence that the investment in the associate is
impaired. If this is the case, Siemens calculates the amount of
impairment as the difference between the recoverable amount
of the associate and its carrying value. Upon loss of significant
influence over the associate, Siemens measures and recognizes
any retaining investment at its fair value. Any difference be-
tween the carrying amount of the associate upon loss of signif-
icant influence and the fair value of the retaining investment
and proceeds from disposal is recognized in profit or loss.
Foreign currency translation – The assets, including good-
will, and liabilities of foreign subsidiaries, where the function-
al currency is other than the euro, are translated using the
spot exchange rate at the end of the reporting period, while
the Consolidated Statements of Income are translated using
average exchange rates during the period. Differences arising
from such translations are recognized within equity and re-
classified to net income when the gain or loss on disposal of
the foreign subsidiary is recognized. The Consolidated State-
ments of Cash Flow are translated at average exchange rates
during the period, whereas cash and cash equivalents are
translated at the spot exchange rate at the end of the reporting
period.
The exchange rate of the U.S. dollar, Siemens’ significant cur-
rency outside the euro zone used in the preparation of the
Consolidated Financial Statements is as follows:
Year-end exchange
rate € quoted into
currencies
specified below
Annual average rate
€ quoted into
currencies
specified below
September ,
Year ended
September ,
Currency ISO Code    
U.S. dollar USD 1.351 1.293 1.313 1.303
Foreign currency transaction – Transactions that are de-
nominated in a currency other than the functional currency of
an entity, are recorded at that functional currency applying the
spot exchange rate at the date when the underlying transac-
tions are initially recognized. At the end of the reporting peri-
od, foreign currency-denominated monetary assets and liabili-
ties are revalued to functional currency applying the spot ex-
change rate prevailing at that date. Gains and losses arising
from these foreign currency revaluations are recognized in net
income. Those foreign currency-denominated transactions
which are classified as non-monetary are remeasured using
the historical spot exchange rate.
Revenue recognition – Under the condition that persuasive
evidence of an arrangement exists revenue is recognized to
the extent that it is probable that the economic benefits will
flow to the Company and the revenue can be reliably mea-
sured, regardless of when the payment is being made. In cases
where the inflow of economic benefits is not probable due to
customer related credit risks the revenue recognized is subject
to the amount of payments irrevocably received. Revenue is
measured at the fair value of the consideration received or re-
ceivable net of discounts and rebates and excluding taxes or
duty. The Company assesses its revenue arrangements against
specific criteria in order to determine if it is acting as principal
or agent. The following specific recognition criteria must also
be met before revenue is recognized:
Sale of goods: Revenue from the sale of goods is recognized
when the significant risks and rewards of ownership of the goods
have passed to the buyer, usually on delivery of the goods.