Siemens 2014 Annual Report Download - page 297

247 D. Consolidated Financial Statements 337 E. Additional Information
248 D. Consolidated Statements of Income
249 D. Consolidated Statements of Comprehensive Income
250 D. Consolidated Statements of Financial Position
251 D. Consolidated Statements of Cash Flows
252 D. Consolidated Statements of Changes in Equity
254 D. Notes to Consolidated Financial Statements
330 D. Supervisory Board and Managing Board

Cash and cash equivalents includes €  million and €  mil-
lion as of September ,  and , respectively, which are
not available for use by Siemens mainly due to minimum
reserve requirements with banks.
As of September ,  and , the carrying amount of
financial assets Siemens has pledged as collateral amounted to
€  million and €  million, respectively.
The carrying amounts of cash and cash equivalents, trade and
other receivables and trade payables with a remaining term of
up to twelve months, other current financial assets and liabili-
ties represent a reasonable approximation of their fair values,
mainly due to the short-term maturities of these instruments.
Fixed-rate and variable-rate receivables with a remaining term
of more than twelve months, including receivables from
finance leases, are evaluated by the Company based on para-
meters such as interest rates, specific country risk factors, indi-
vidual creditworthiness of the customer, and the risk character-
istics of the financed project. Based on this evaluation,
allowances for these receivables are recognized. As of Septem-
ber ,  and , the carrying amounts of such receiv-
ables, net of allowances, approximate their fair values.
The fair value of notes and bonds is based on prices provided
by price service agencies at the period-end date (Level ). The
fair value of loans from banks and other financial indebted-
ness, obligations under finance leases as well as other non-
current financial liabilities is estimated by discounting future
cash flows using rates currently available for debt of similar
terms and remaining maturities (Level ).
Financial instruments categorized as financial assets and
finan cial liabilities measured at fair value are presented in the
following table:
September ,
(in millions of €)  
Financial assets measured at fair value
Available-for-sale financial assets 2,536 1,994
Derivative financial instruments 2,569 2,330
Not designated in a hedge accounting
relationship 1,783 1,587
In connection with fair value hedges
(mainly interest rate derivatives) 476 472
In connection with cash flow hedges (main-
ly foreign currency exchange derivatives) 98 153
Embedded derivatives 212 118
5,105 4,324
Financial liabilities measured at fair value
Derivative financial instruments 1,749 1,047
Not designated in a hedge accounting
relationship 1,308 765
In connection with fair value hedges 58
In connection with cash flow hedges (main-
ly foreign currency exchange derivatives) 406 152
Embedded derivatives 30 122
1,749 1,047
The fair value of available-for-sale financial assets quoted in an
active market is based on price quotations at the period-end
date. The fair value of debt instruments is either based on
prices provided by price service agencies or estimated by dis-
counting future cash flows using current market interest rates.
The Company limits default risks resulting from derivative
financial instruments by a careful counterparty selection.
Derivative financial instruments are generally transacted with
financial institutions with investment grade credit ratings. The
fair valuation of derivative financial instruments at Siemens
incorporates all factors that market participants would con-
sider. This includes credit risks for which a credit valuation
adjustment is determined based on Siemens’ net exposure
towards each counter party. The exact calculation of fair values
of derivative financial instruments depends on the specific
type of instrument: