Siemens 2013 Annual Report Download - page 269

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

An impairment loss for debt instruments is reversed in
sub sequent periods, if the reasons for the impairment no
longer exist.
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 income taxes (applicable
deferred income tax). Certain derivative instruments embed-
ded 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 lia-
bilities that result from meeting the firm commitments are
adjusted 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 hedg-
es are recognized in line item Other comprehensive income,
net of income taxes (applicable deferred income tax), and any
ineffective portion is recognized immediately in net income.
Amounts accumulated in equity are reclassified into net in-
come in the same periods in which the hedged item affects net
income.
Share-based payment – IFRS , Share-based payment, dis-
tinguishes between cash-settled and equity-settled share-
based payment transactions. For both types, the fair value is
measured at grant date and compensation expense is recog-
nized over the vesting period during which the employees be-
come unconditionally entitled to the awards granted.
Cash-settled awards are re-measured at fair value at the end of
each reporting period and upon settlement. The fair value of
share-based awards, such as stock awards, matching shares,
and shares granted under the Jubilee Share Program, is deter-
mined as the market price of Siemens shares, considering
dividends during the vesting period the grantees are not enti-
tled to and market conditions and non-vesting conditions, if
applicable.
Prior-year information – The presentation of certain pri-
or-year information has been reclassified to conform to the
current year presentation. In fiscal , in the Consolidated
Statements of Cash Flow, the Company changed retrospective-
ly the presentation of salary withholdings of share-based pay-
ment granted to employees to better reflect the nature of the
transaction. In fiscal  € million were retrospectively re-
classified from cash flows from financing activities to cash
flows from operating activities (continuing operations).
RECENTLY ADOPTED ACCOUNTING
PRONOUNCEMENTS
As of October , , the Company early adopted IAS , Em-
ployee Benefits (revised ; IAS R), which was issued by
the IASB in June . The standard is effective for annual peri-
ods beginning on or after January , ; early application is
permitted. The standard is applied retrospectively. The amend-
ment was endorsed by the EU in June .
The following amendments to IAS  have a significant im-
pact on the Company ’s Consolidated Financial Statements:
IAS R replaces interest cost and expected return on assets
with a net interest amount that is calculated by applying the
discount rate used to measure the defined benefit obligation
to the net defined benefit liability (asset). Net interest on the
net defined benefit liability (asset) comprises interest income
on plan assets and interest cost on the defined benefit obliga-
tion. The difference between the interest income on plan as-
sets and the return on plan assets is included in line item
Remeasurements of defined benefit plans and recognized in
the Consolidated Statement of Comprehensive Income. A lesser
effect results from the recognition of unvested past service
costs in income immediately when incurred instead of amor-
tization over the vesting period as well as from recognizing
other administration costs which are unrelated to the man-
agement of plan assets when the administration services are
provided. The elimination of the corridor approach does not