BASF Report 2021 Consoli dated Financial Statements – Notes 225 Depreciation, amortization and impairments of noncurrent As in the previous year, losses from divestitures and the disposal 10 Investments accounted for using the equity assets and of the disposal groups were €135 million in 2021 and of noncurrent assets were mainly in connection with the divestiture method and other financial assets included impairments in the amount of €116 million resulting of the global pigments business. primarily from the closure of a plant in North America, impairments Joint ventures and associated companies are accounted for using of plants in Asia, and impairments of construction in progress due to The rise in expenses from the addition of valuation allowances the equity method. The carrying amounts of shareholdings are discontinued investment projects. In 2020, this item amounted to on business-related receivables resulted mainly from a trans- adjusted annually based on the pro rata share of net income, €2,968 million, primarily due to impairments of €2,368 million, which action tax in Brazil. dividends and other changes in equity. Should there be indications resulted from the economic impact of the coronavirus pandemic of a reduction in the value of an investment, an impairment test is and affected all segments. In 2020, there were also impairments in In both years, other expenses included expenses for litigation, for conducted and, if necessary, an impairment is recognized in the the amount of €377 million because of restructuring in North REACH, for the provision of services, for warranties and for activities income statement. Furthermore, earnings and the carrying amount America, Europe and Asia Pacific. related to the BASF 4.0 project and for planning the new Verbund are adjusted when accounting policies deviate or as a result of For more information, see Note 14 from page 236 onward and Note 15 from page 240 onward site in Guangdong, China. Other expenses arose in connection with purchase price allocations, which primarily affects Wintershall the coronavirus pandemic in both years, but especially due to Dea AG, Kassel/Hamburg, Germany. Costs from other miscellaneous revenue-generating activities BASF’s “Helping Hands” aid campaign in 2020. relate to the items presented in other operating income. Exploration and development expenses in the oil and gas business, for which the equity method is applied, are accounted for using the Expenses from hedging transactions and LTI programs related successful efforts method. Under this method, costs of successful to expenses from LTI programs in the amount of €37 million in 2021 exploratory drilling as well as successful and dry development wells and €35 million in 2020. Further expenses resulted from changes in are capitalized. the fair value of currency derivatives and other hedging transactions. Income from integral companies accounted for using the equity method is presented in EBIT, and income from non-integral companies accounted for using the equity method is presented together with income from other financial assets in net income from shareholdings. Similarly, integral and non-integral shareholdings accounted for using the equity method are also shown separately in the balance sheet. The material equity-accounted shareholding that is classified as integral is BASF-YPC Company Ltd., Nanjing, China, in which BASF and Sinopec each hold 50%, and which operates the Verbund site in Nanjing, China. The material non-integral sharehold- ing is the Wintershall Dea AG oil and gas company, which operated as a GmbH until July 2021, and in which BASF holds a 72.7% share of equity (voting right share 67%). Wintershall Dea was operated jointly as a joint venture by partners BASF and LetterOne until October 2021. Through the instatement of independent members to the main body responsible for decisions about relevant activities, BASF has exercised significant influence since November 1, 2021. Accordingly, Wintershall Dea has been classified as an associated company since that date.