6. Net Sales

Sales are categorized according to “geographical regions and key countries”, and mainly comprise sales from contracts with customers and an insignificant amount of rental and leasing sales. The table also contains a breakdown of sales by reportable segments.

The following table presents the opening and closing balances of trade accounts receivable, contract assets, and contract liabilities.

Contract assets are recognized in case the right to consideration in exchange for goods or services that have been transferred to a customer is conditional. This occurs primarily in the event of goods delivered to consignment warehouses of external customers. Contract assets are recognized as receivables upon invoicing.

Contract liabilities are recognized for advance payments received from customers prior to transferring goods or services. These contract liabilities are recognized as sales when the goods or services have been transferred.

Sales from performance obligations satisfied (or partially satisfied) in previous periods and recognized in fiscal 2018 amounted to €2 million.

The changes in contract assets and contract liabilities in the reporting period resulted from the following circumstances:

The following table provides the transaction price allocated to the remaining performance obligations as of December 31, 2018. The total amount is divided according to the reporting period when it is expected to be recognized.

The disclosures on the transaction price allocated to the remaining performance obligations is based on long-term supply contracts according to IFRS 15 (Revenue from Contract with Customers) which stipulate minimum volumes to be purchased as agreed between both parties.

Performance obligations from contracts with an original expected term of twelve months or less are excluded. Similarly, the disclosure of the transaction price excludes performance obligations satisfied over time for which Covestro has the right to consideration in an amount that corresponds directly with the value to the customer of the performance completed to date and for which Covestro may recognize revenue in the amount to which Covestro has the right to invoice.

The transaction price only includes variable considerations arising from contracts with customers, like sales- or volume-based rebates or price formulas, for which the prices are derived from external, market-based indices, to the extent that they are not constrained as defined in IFRS 15.