Derivatives with a positive fair value create credit or default risk when counterparties are unable to meet their obligations. In order to minimise this risk, credit limits are granted to individual banks and framework agreements are used to allow for fair value offsetting of open derivative positions in the event of the insolvency of a counterparty. Tangible capital assets are recorded at acquisition cost. Assets subject to exhaustion are depreciated. Depreciation is made for impairments that go beyond the depletion reflected in the depreciation and that should be sustainable. Entries made during the reference year are depreciated on a straight-line basis. Assets of low value up to €250.00 are recognised in the year of the acquisition charge. Low-value assets, which cost between €250.00 and €1,000.00, are grouped into a single collection item and amortized on a straight-line basis over five years. The General Meeting of LANXESS AG, on 15 May 2018, authorised the Board of Directors to do so no later than 14 May 2023, with the agreement of the Supervisory Board, option bonds and/or convertible bonds, participating securities and/or gain bonds, or a combination of these instruments (in summary referred to as “bonds”) – name or bearer Bonds – with a total value of up to €1,000,000,000 with or without limited business proceeds of a total amount of €4,914 T (previous year: €7,256 T) and mainly for the services provided to LANXESS Deutschland GmbH in Germany on the basis of a service contract. Claims on affiliated companies totalling €4,513,800 (previous year: €3,060,820) mainly concerned short-term private receivables, including delimited interest, claims on financial transactions and receivables resulting from profit shifting contracts. Claims on supplies and services amounting to €1,628 T Under the framework agreement concluded between Bayer AG and LANXESS AG at the same time as the spin-off and acquisition contract, Bayer AG and LANXESS AG have agreed, inter alia, on mutual compensation commitments for the commitments related to the allocation of assets in question, as well as on special rules for the attribution of damage liability in the area of product liability, Pollution and cartel violations.
The framework agreement also contains provisions on the tax burden which do not include deferred taxes. By 31 December 27, 2019, LANXESS AG expected a future tax advantage resulting from temporary accounting differences both in its own financial statements and in that of the companies with which it forms a tax entity. This amount was calculated on the basis of a combined income tax rate of 29.1% (LANXESS AG and companies with which it has profit shifting contracts). To fulfill the obligations set out in the collective agreement for the chemical industry with respect to the “Demographic Change Fund” for workers, cash was deposited each year in a fiduciary account. The fair value of the fiduciary assets corresponds to the fair value of the commitments of the “Demographic Change Fund”, which amounts to €299 T (previous year: €249 T). The carrying amounts of fiduciary assets and liabilities recognised in other provisions have been offset, as have income and expenses. In addition, LANXESS AG provided, on behalf of subsidiaries, guarantees on payment obligations related to future deliveries under long-term purchase contracts. . . .