![]() ![]() Transfers in 2020 included dividend payments from BASF-YPC Company Ltd. in 2020, and €9 million in 2019.ĭisposals in 2020 included primarily a capital decrease in the amount of €8 million at Yara Freeport LLC, Wilmington, Delaware. Of that, –€17 million related to BASF-YPC Company Ltd. Proportional changes of other comprehensive income included income and expense recognized directly in equity and related primarily to currency effects. Proportional changes of other comprehensive incomeĬarrying amount according to the equity method as of the end of the year Proportional income after taxes and other adjustments to income and expenses Reconciliation of the carrying amount of integral shareholdings accounted for using the equity method (Million €)Ĭarrying amount according to the equity method as of the beginning of the year 10.1 Integral companies accounted for using the equity method Similarly, integral and non-integral shareholdings accounted for using the equity method are also shown separately in the balance sheet. Income from integral companies accounted for using the equity method is presented in the BASF Group’s EBIT, and income from non-integral companies accounted for using the equity method is presented together with income from other financial assets in the BASF Group’s net income from shareholdings. Under this method, costs of successful exploratory drilling as well as successful and dry development wells are capitalized. Furthermore, earnings and the carrying amount are adjusted when accounting policies deviate or as a result of purchase price allocations, which primarily affects Wintershall Dea GmbH, Kassel/Hamburg, Germany.Įxploration and development expenses in the oil and gas business, for which the equity method is applied, are accounted for using the successful efforts method. Should there be indications of a reduction in the value of an investment, an impairment test is conducted and, if necessary, an impairment is recognized in the income statement. The carrying amounts of shareholdings are adjusted annually based on the pro rata share of net income, dividends and other changes in equity. However, it will still continue to cover many shares which are redeemable in accordance with their terms.Joint ventures and associated companies are accounted for using the equity method. The fact that the accounting treatment is the main feature of identifying such shares is a marked alteration from the ‘shares as debt’ approach to identifying relevant shares (which used the concept of ‘redeemability’ as the main feature required). Key to this regime therefore lies in the exceptions and this guidance will cover those exceptions in detail. Hence, any return from those shares will be taxed within the loan relationships regime. ![]() The fundamental premise is that, unless certain exceptions are met, any shares accounted for as a liability will be taxed as though they are a liability. However, the complications of such shares mean that they are best dealt with within separate legislation. The background to bringing in new legislation to deal with avoidance schemes that involve non-participating or fixed rate redeemable preference shares is the same as that for the more general ‘disguised interest’ rules. ![]() ![]() While there are a number of key differences, the tax rules for shares accounted for as liabilities in CTA09/S521A-F are, in the main, the successor to the rules relating to redeemable shares at FA96/S91D ( CFM45000) and have been brought in along with the ‘disguised interest’ rules at CTA09/S486A-E ( CFM42000). ‘Shares as liabilities’ and ‘shares as debt’ While the target for these rules is specified towards a certain type of share, the general concepts of the treatment and identification of interest-like returns follows those in the ‘disguised interest’ rules at CTA09/S486A-E (see CFM42000). The tax rules for preference shares accounted for as liabilities seek to ensure that any interest-like return from such shares will be taxed under the loan relationship rules. Where that is the case, the accounting will usually follow the substance and therefore the shares would be shown in the accounts as a financial liability. Such preference shares are, in substance, performing a debt function and hence are quasi-loans. This would typically relate to preference shares that are redeemable and non-participating or fixed rate. Certain types of share can be accounted for as a financial liability rather than equity and this can give rise to specific tax issues. ![]()
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