18 – Receivables and Miscellaneous Assets (XLS:) XLS Other receivables and miscellaneous assets (Million €) December 31, 2019 December 31, 2018 Noncurrent Current Noncurrent Current Loans and interest receivables 165 275 224 271 Derivatives with positive fair values 204 395 121 224 Receivables from finance leases 20 3 23 2 Receivables from capital equipment of nonconsolidated subsidiaries – 123 – 98 Receivables from bank acceptance drafts – 188 – 163 Other 306 217 243 169 Other receivables and assets that qualify as financial instruments 695 1,201 611 927 Prepaid expenses 103 310 57 251 Defined benefit assets 123 – 63 – Tax refund claims 132 967 107 891 Employee receivables 0 15 0 16 Precious metal trading items – 977 – 780 Other 59 320 48 274 Other receivables and assets that do not qualify as financial instruments 417 2,589 275 2,212 Other receivables and miscellaneous assets 1,112 3,790 886 3,139 The decline in noncurrent loans and interest receivables was predominantly due to changes in loans to nonconsolidated subsidiaries. The increase in noncurrent derivatives with positive fair values primarily affected the market valuation of combined interest rate and currency swaps. The change in current derivatives with positive fair market values was largely attributable to the increase in fair values of commodity derivatives for precious metals. Bank acceptance drafts are used as an alternative form of payment in China. Bank acceptance drafts are issued at a discount from their par value. They can be held to maturity, traded or redeemed prematurely at a discount. If BASF discounts a bank acceptance draft with recourse, a liability toward the credit institution is recognized in the amount of the payment received. Current prepaid expenses in 2019 mainly included prepayments of €30 million related to operating activities compared with €22 million in 2018, as well as €79 million in prepayments for insurance in 2019 compared with €83 million in 2018. Prepayments for license costs increased from €38 million in 2018 to €74 million in 2019. Noncurrent prepaid expenses in 2019 included higher advance payments for received precious metal catalysts to be refurbished. The change in current tax refund claims is largely attributable to the rise in open income tax receivables. The rise in current other receivables and assets, which represent financial instruments, was due to deposits on commodity derivatives, which were traded through clearing houses. Precious metal trading items primarily comprise physical items, precious metal accounts as well as long positions in precious metals, which are largely hedged through sales or derivatives. Expected losses on trade accounts receivable at BASF are calculated primarily on the basis of internal or external customer ratings and the associated probability of default. The following table presents the gross values and credit risks for trade accounts receivable measured at amortized cost as of December 31, 2019. Accounts receivable, trade (Million €) Creditworthiness as of December 31, 2019 Equivalence to external ratinga Gross carrying amounts a Standard & Poor’s rating High/medium credit rating from AAA to BBB– 5,880 Low credit rating from BB– to D 3,201 BASF generally monitors the credit risk associated with counterparties with which receivables exist in the form of financial instruments. In accordance with IFRS 9, impairments for expected credit losses on receivables are recognized based on this. (XLS:) XLS Valuation allowances on receivables (financial instruments) 2019 (Million €) As ofJanuary 1, 2019 Additions Reversals Reclassification between stages Translation effect Reclassificationto assets of disposal groups As ofDecember 31, 2019 Accounts receivable, trade 353 168 146 (1) (3) (47) 324 of which stage 2 42 64 61 0 0 (2) 43 stage 3 311 104 85 (1) (3) (45) 281 Other receivables 27 15 3 1 0 – 40 of which stage 1 3 3 2 0 0 – 4 stage 2 0 0 0 0 0 – 0 stage 3 24 12 1 1 0 – 36 Total 380 183 149 0 (3) (47) 364 At BASF, a comprehensive, global credit insurance program covers accounts receivable, trade. Under a global excess of loss policy, future bad debts are insured for essentially all BASF Group companies excluding joint ventures. The program has no impact on the calculation of valuation allowances in accordance with IFRS 9. No compensation claims were incurred in either 2019 or 2018. Payment terms are generally agreed upon individually with customers and, as a rule, are within 90 days. In 2019, valuation allowances of €168 million were added for trade accounts receivable, and valuation allowances of €146 million were reversed. In the previous year, valuation allowances of €128 million were added for trade accounts receivable, and valuation allowances of €117 million were reversed. In 2019, valuation allowances of €15 million were recognized for other receivables representing financial instruments, and valuation allowances of €3 million were reversed. In the previous year, valuation allowances of €11 million were recognized for all other receivables, and valuation allowances of €9 million were reversed. Additions included valuation allowances of €9 million due to a change in valuation parameters. back next