(3) Discretionary decisions and sources of estimation uncertainty
Dealing with discretionary decisions and sources of estimation uncertainty
The preparation of the consolidated financial statements requires the Group to make discretionary decisions and assumptions as well as estimates to a certain extent. The discretionary scope and estimation uncertainty are assessed in a Group-specific manner. Discretion describes the need to make assumptions concerning recognition or measurement. Estimation uncertainty denotes the degree of availability and reliability of historical experience and external data for future developments.
Increased uncertainty due to the Covid-19 pandemic
The Group is continuously examining the impact of the Covid-19 pandemic on its business and the resulting effects for the Group’s accounting. To date, the Fertility franchise in the Healthcare business sector and the Surface Solutions and Display Solutions business units in the Performance Materials business sector have been most negatively affected by the Covid-19 pandemic. By contrast, the Process Solutions business unit in the Life Science business sector in particular is benefiting from increased demand, while all the other areas have seen either a slight negative impact or been largely unaffected by the pandemic. Based on the course of business and current planning, there was nothing to suggest that the going concern assumption should not have been applied in preparing these consolidated financial statements. As a preventive measure, however, the Group had increased its cash and cash equivalents in order to secure its liquidity in the meantime. There was no risk of a liquidity bottleneck at any time. Due to the high dynamics of the pandemic and the lack of historical experience, the estimates in these consolidated financial statements are subject to a greater degree of uncertainty than would usually be the case. Where making estimates involved particular challenges as a result of the Covid-19 pandemic, this is discussed in the following overview and the respective notes.
Overview of significant discretionary decisions and sources of estimation uncertainty
The accounting matters with the most significant discretionary decisions as well as the most comprehensive assumptions relating to the future and sources of estimation uncertainty are described below:
Accounting matter |
|
Carrying amount as of Dec. 31, 2020 in € million |
|
IFRS |
|
Discretionary scope/ estimation uncertainty |
|
Sensitivity analysis |
|
Increased uncertainty due to the Covid-19 pandemic |
|
Note |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Goodwill |
|
15,959 |
|
|
|
|
|
yes |
|
yes |
|
|
Determination of recoverable amount |
|
|
|
IAS 36 |
|
high |
|
|
|
|
|
|
Other intangible assets |
|
7,653 |
|
|
|
|
|
yes |
|
yes |
|
|
Identification and measurement of intangible assets within the scope of business combinations |
|
|
|
IFRS 3 |
|
high |
|
|
|
|
|
|
In-licensing of intangible assets |
|
|
IAS 38 |
|
medium |
|
|
|
|
|||
Determination of amortization |
|
|
IAS 38 |
|
medium |
|
|
|
|
|||
Identification of impairments or reversal of impairments |
|
|
IAS 36 |
|
high |
|
|
|
|
|||
Property, plant, and equipment |
|
6,421 |
|
|
|
|
|
no |
|
no |
|
|
Determination of depreciation |
|
|
|
IAS 16 |
|
medium |
|
|
|
|
|
|
Identification of impairments or reversal of impairments |
|
|
IAS 36 |
|
medium |
|
|
|
|
|||
Leases |
|
429 |
|
|
|
|
|
yes |
|
no |
|
|
Recognition and measurement of lease arrangements |
|
|
|
IFRS 16 |
|
medium |
|
|
|
|
|
|
Inventories |
|
3,294 |
|
|
|
|
|
no |
|
yes |
|
|
Identification of impairments or reversal of impairments |
|
|
|
IAS 2 |
|
medium |
|
|
|
|
|
|
Trade and other receivables |
|
3,221 |
|
|
|
|
|
yes |
|
yes |
|
|
Determination of loss allowance |
|
|
|
IFRS 9 |
|
medium |
|
|
|
|
|
|
Other financial assets |
|
|
|
|
|
|
yes |
|
no |
|
||
Determination of fair values of contingent considerations |
|
260 |
|
IFRS 13 |
|
high |
|
|
|
|
|
|
Determination of fair values of equity instruments |
|
499 |
|
IFRS 9, IFRS 13 |
|
medium |
|
|
|
|
||
Provisions for pensions and other post-employment benefits |
|
|
|
|
|
|
|
yes |
|
yes |
|
|
Determination of parameters for the valuation of present value of defined-benefit obligations |
|
6,352 |
|
IAS 19 |
|
medium |
|
|
|
|
|
|
Other provisions and contingent liabilities |
|
741 |
|
|
|
|
|
no |
|
no |
|
|
Recognition and measurement of other provisions and contingent liabilities |
|
|
|
IAS 37 |
|
high |
|
|
|
|
|
|
Determination of parameters for the valuation of fair values of share-based payment programs |
|
|
IFRS 2 |
|
medium |
|
|
|
|
|||
Collaboration agreements |
|
|
|
|
|
|
yes |
|
no |
|
||
Revenue recognition for upfront and milestone payments in collaboration agreements |
|
|
- |
|
medium |
|
|
|
|
|
|
|
Revenue recognition |
|
|
|
|
|
|
yes |
|
no |
|
||
Measurement of sales deductions and refund liabilities |
|
666 |
|
IFRS 15 |
|
high |
|
|
|
|
|
|
Income tax |
|
|
|
|
|
|
|
no |
|
no |
|
|
Recognition and measurement of income tax liabilities |
|
1,460 |
|
IAS 12 |
|
high |
|
|
|
|
|
|
Recognition and measurement of deferred taxes from temporary differences |
|
|
|
IAS 12 |
|
medium |
|
|
|
|
||
Recognition of deferred tax assets from tax loss carryforwards |
|
20 |
|
IAS 12 |
|
high |
|
|
|
|
||
Assets held for sale |
|
|
|
|
|
|
|
no |
|
no |
|
|
Date on which assets and liabilities are classified as “held for sale” |
|
|
IFRS 5 |
|
medium |
|
|
|
|
|
|