IFRS 11 para 20(d), change in revenue recognition of sales by joint operation following IFRIC interpretation

BASF SE – Annual report – 31 December 2015

Industry: manufacturing

1.2 Changes in accounting principles (extract)

Change in presentation of joint operation sales in BASF Group Financial Statements

At its meeting on March 24, 2015, the IFRS Interpretation Committee determined that, according to IFRS 11.20(d), a joint operator’s share of the output purchased by another partner cannot be recognized as revenue as long as these sales correspond to the operator’s share of ownership interest in the joint operation. As a consequence of this determination, this portion of the joint operation’s sales to other partners ceased to be recognized as of January 1, 2015. Partners’ share of the output purchased in excess of their ownership interest will continue to be shown as sales to third parties in the BASF Group Financial Statements. Sales by the joint operation to BASF Group companies will also continue to be eliminated.

Sales revenue for 2014 contained sales of €415 million that, according to the new recognition method, would have been eliminated against cost of sales. If the recognition method had remained unchanged, sales and cost of sales for 2015 would each have been €76 million higher. A restatement of the prior-year figures was not necessary, as this change in recognition would have had no material impact on the presentation of the net assets, financial position and results of operations of the BASF Group in 2014.

 

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