BASF Report 2021 Consoli dated Financial Statements – Notes 203 Foreign currency translation: The cost of assets acquired in Selected exchange rates contracts. The assets and liabilities of disposal groups are recog- foreign currencies and revenue from sales in foreign currencies are EUR 1 equals nized at the lower of the sum of their carrying amounts or fair value determined by the exchange rate on the date the transaction is Closing rates Average rates less costs to sell; this does not apply to assets that do not fall under recognized. Foreign currency receivables and liabilities are valued at Dec. 31, Dec. 31, the valuation principles of IFRS 5. Depreciation of noncurrent assets 2021 2020 2021 2020 the exchange rates on the balance sheet date. Changes in assets Brazil (BRL) 6.31 6.37 6.38 5.89 and the use of the equity method are suspended. and liabilities arising from foreign currency translation are recognized China (CNY) 7.19 8.02 7.63 7.87 in the income statement and reported under other operating income United Kingdom (GBP) 0.84 0.90 0.86 0.89 Discontinued operations: These are classified as held for sale and or expenses, other financial result, and in the case of financial assets Japan (JPY) 130.38 126.49 129.88 121.85 are presented as discontinued operations in BASF’s Consolidated measured at fair value through other comprehensive income, in Malaysia (MYR) 4.72 4.93 4.90 4.80 Financial Statements in accordance with IFRS 5. Until closing, the other comprehensive income. Mexico (MXN) 23.14 24.42 23.99 24.52 income after taxes of discontinued operations is shown in income Norway (NOK) 9.99 10.47 10.16 10.72 after taxes of the BASF Group as a separate item (income after Russia (RUB) 85.30 91.47 87.15 82.72 Translation of foreign currency financial statements: The Switzerland (CHF) 1.03 1.08 1.08 1.07 taxes from discontinued operations). In addition, the assets and translation of foreign currency financial statements depends on the South Korea (KRW) 1,346.38 1,336.00 1,354.06 1,345.58 liabilities of the discontinued operations are reclassified to a disposal functional currency of the consolidated companies. For companies United States (USD) 1.13 1.23 1.18 1.14 group (assets or liabilities of disposal groups). The statement of cash whose functional currency is not the euro, translation into the flows is not adjusted. The activities of discontinued operations are reporting currency is based on the closing rate method: Balance not allocated to any reportable segment in financial reporting. sheet items are translated into euros using closing rates on the 1.4 Accounting policies For more information, see Note 3 from page 207 onward and Note 5 from page 213 onward balance sheet date; expenses and income are translated into euros at monthly average rates and accumulated for the year. The The accounting policies for the individual items in the Balance Sheet difference between a company’s translated equity at historical rates and the Statement of Income are presented in the respective at the time of acquisition or retention and its equity at closing rates sections of the Notes. on the balance sheet date is reported under other comprehensive income (translation adjustments) and is recognized in the income Business combinations: In business combinations, the acquired statement only upon the company’s disposal. assets and liabilities are recognized at fair value on the date the acquirer effectively obtains control. The fair value of acquired assets For certain companies outside the eurozone or U.S. dollar zone, the and assumed liabilities at the date of acquisition, as well as the euro or U.S. dollar is the functional currency. In such cases, financial useful lives of the acquired assets, are largely based on projected statements prepared in the local currency are translated into the cash flows. Actual cash flows can deviate significantly from those. functional currency using the temporal method: All nonmonetary Independent external appraisals are typically used for the purchase assets and related depreciation and amortization as well as equity price allocation of material business combinations. Valuations in the are translated at the exchange rate applying to the respective trans- course of business combinations are based on existing information actions. All other balance sheet items are translated using closing as of the acquisition date. rates on the balance sheet date; other expenses and income are translated at monthly average rates. The resulting translation differ- Groups of assets and liabilities held for sale (disposal groups): ences are recognized in the income statement under other operating These comprise those assets and directly associated liabilities income or expenses. If necessary, financial statements in the func- shown separately on the balance sheet whose sale in the context of tional currency are translated into the presentation currency accord- a single transaction is highly probable. A transaction is assumed to ing to the closing rate method. be highly probable if there are no significant risks of completion of the transaction, which usually requires the conclusion of binding