BASF Report 2021 Consoli dated Financial Statements – Notes 244 16 Leases – A number of leases, particularly for real estate and barges, include plan) or the scope (either quantitatively or time-related) of use of extension and termination options. Extension and termination the asset. Accounting policies options are taken into account on recognition of the lease liability only if BASF is reasonably certain that these options will be BASF presents the interest component of lease payments in cash A lease is an agreement that conveys the right to control the use of exercised in the future. When contract terms are being deter- flows from operating activities and the repayment portion in cash identified asset for a defined period of time in return for a payment. mined, consideration is given to all facts and circumstances that flows from financing activities. Lease payments under short-term offer an economic incentive for exercising extension options or agreements, agreements with low-value assets or variable payments Leases in which BASF is a lessee mainly relate to real estate and not exercising termination options. Changes in lease terms arising are presented in cash flows from operating activities. transportation and technical equipment. from the exercise of an extension option or non-exercise of a termination option are only considered if sufficient certainty exists. Leases can be embedded within other contracts. If separation is Estimates and expectations which are asserted at the required under IFRS, the embedded lease is recorded separately commencement date of the lease liability and the right-of-use from its host contract and each component of the contract is asset and pertain to future payments not yet determined on the accounted and measured in accordance with the applicable date of provision are assessed continuously during the lease regulations. term. If subsequently improved or changed knowledge influences the expected payment profile over time, the lease liability is As lessee, BASF accounts for nearly all leases, recognizing right-of- remeasured. use assets for leased assets and liabilities for lease agreements. The – If an existing lease contract is modified, the lease liability and following principles are considered: right-of-use asset must be remeasured, provided the modification – BASF exercises the exemption for lease agreements with a changes the payment profile (pursuant to the interest and principal maximum term of 12 months from the date of provision and low-value assets. Low-value assets are generally defined as leased assets worth a maximum of €5,000. BASF as lessee – Lease liabilities are measured at the present value of the remaining lease payments, taking into account the incremental borrowing Lease liabilities rate. Million € – As a general rule, BASF separates non-lease components, such December 31, 2021 December 31, 2020 as services, from lease payments. Future lease Future lease Lease liabilities Interest portion payments Lease liabilities Interest portion payments – A right-of-use asset is generally recognized at the same amount as the lease liability. Differences may arise from the lease payments 2022 336 30 366 334 29 363 made prior to the provision of the leased asset, less any lease 2023 219 27 246 233 28 261 incentives received. 2024 153 29 182 156 23 179 – After capitalization at commencement date, whereby the right-of- 2025 100 25 125 109 24 133 use asset is measured at cost, the right-of-use asset is generally 2026 74 20 94 74 18 92 depreciated over the lease term using the straight-line method. 2027 and thereafter 532 167 699 455 151 606 Total 1,414 298 1,712 1,361 273 1,634