1.3 – Group accounting principles

Scope of consolidation: The scope of consolidation is based on the application of the new standards IFRS 10 and 11 effective January 1, 2013.

In addition to BASF SE, the Consolidated Financial Statements include all material subsidiaries on a fully consolidated and all material joint operations on a proportionally consolidated basis. Companies whose business is dormant or of low volume, and are of secondary importance for the presentation of a true and fair view of the net assets, financial position and results of operations, are not consolidated, but rather are reported under other shareholdings. These companies are carried at amortized cost and are written down in the case of an impairment. The aggregate assets and equity of these companies amount to less than 1% of the corresponding value at Group level.

Application of the equity method: Joint ventures and associated companies are accounted for in the Consolidated Financial Statements using the equity method. Associated companies are entities in which significant influence can be exercised over their operating and financial policies and which are not subsidiaries, joint ventures or joint operations. In general, this applies to companies in which BASF has an interest between 20% and 50%.

Consolidation methods: Assets and liabilities of consolidated companies are uniformly recognized and measured in accordance with the principles described herein. For equity-accounted companies, material deviations in measurement resulting from the application of other accounting principles are adjusted for.

Transactions between consolidated companies as well as intercompany profits resulting from sales and services rendered between consolidated companies are eliminated in full; for joint operations, they are proportionally eliminated. Material intercompany profits related to companies accounted for using the equity method are eliminated.

Capital consolidation is conducted at the acquisition date according to the purchase method. Initially, all assets, liabilities and additional intangible assets that are to be capitalized are valued at fair value. Finally, the acquisition cost is compared with the proportional share of the net assets acquired at fair value. The resulting positive differences are capitalized as goodwill. Negative differences are reviewed once more, then recognized directly in the income statement.

The incidental acquisition costs of a business combination are recognized in the income statement under other operating expenses.

Foreign currency translations: The cost of assets acquired in foreign currencies and revenue from sales in foreign currencies are recorded at the exchange rate on the date of the transaction. Foreign currency receivables and liabilities are valued at the exchange rates on the balance sheet date. Foreign exchange gains or losses resulting from the translation of assets and liabilities are reported as other operating expenses or other operating income under other financial income or expenses; for available-for-sale financial assets, they are reported in other comprehensive income.

Translation of foreign currency financial statements: The translation of foreign currency financial statements depends on the functional currency of the consolidated companies. For companies whose functional currency is not the euro, translation into the reporting currency is based on the closing rate method: Balance sheet items are translated into euros using closing rates on the balance sheet date; expenses and income are translated into euros at monthly average rates and accumulated for the year. The difference between a company’s translated equity at historical rates at the time of acquisition and its equity at closing rates on the balance sheet date is reported separately in equity under other comprehensive income (translation adjustments) and is recognized in income only upon the company’s disposal.

For certain companies outside the eurozone or U.S. dollar zone, the euro or U.S. dollar is the functional currency.

  (XLS:) Download (xls, 23 kB)

Selected exchange rates (1 EUR equals)

 

Closing rates

 

Average rates

 

Dec. 31, 2013

Dec. 31, 2012

 

2013

2012

Brazil (BRL)

3.26

2.70

 

2.87

2.51

China (CNY)

8.35

8.22

 

8.16

8.11

Great Britain (GBP)

0.83

0.82

 

0.85

0.81

Japan (JPY)

144.72

113.61

 

129.66

102.49

Malaysia (MYR)

4.52

4.03

 

4.19

3.97

Mexico (MXN)

18.07

17.18

 

16.96

16.90

Russia (RUB)

45.32

40.33

 

42.34

39.93

Switzerland (CHF)

1.23

1.21

 

1.23

1.21

South Korea (KRW)

1,450.93

1,406.23

 

1,453.91

1,447.69

United States (USD)

1.38

1.32

 

1.33

1.28