18. Receivables and Miscellaneous Assets

The rise in noncurrent derivatives with positive fair values primarily resulted from 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.

Prepaid expenses in 2022 mainly included prepayments of €45 million related to operating activities compared with €41 million in 2021, as well as €77 million in prepayments for insurance in 2022 compared with €93 million in 2021. Prepayments for license costs increased from €49 million in 2021 to €55 million in 2022.

As in the previous year, defined benefit assets were recognized in 2022 mainly for the contractual trust arrangement of BASF Pensions­treuhand e.V. as well as at Group companies in Switzerland and the United Kingdom. An asset ceiling came into effect in 2022 for the pension plans in Switzerland.

• For more information on plan assets, see Note 22

The change in current tax refund claims was largely attributable to the rise in income tax receivables.

Precious metal trading items primarily comprise physical items, precious metal accounts as well as long positions in precious metals, which are largely hedged through forward sales or derivatives.

The rise in current other receivables and assets, which do not represent financial instruments, was due to higher advance payments.

Expected losses of 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, 2022.

There are currently no significant credit risks (or a concentration thereof) associated with other financial instruments. BASF generally monitors the credit risk associated with counterparties with which receivables representing financial instruments exist. In accordance with IFRS 9, impairments for expected credit losses on receivables are recognized based on this.

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 2022 or 2021.

Payment terms are generally agreed upon individually with customers and, as a rule, are within 90 days. In 2022, valuation allowances of €130 million (2021: €120 million) were added for trade accounts receivable, and valuation allowances of €124 million (2021: €110 million) were reversed.

In 2022, valuation allowances of €24 million were recognized for other receivables representing financial instruments, and valuation allowances of €19 million were reversed. In the previous year, valuation allowances of €28 million were recognized and valuation allowances of €40 million were reversed.