Accounts and Notes Receivable (Notes)

3 Months Ended

Mar. 31, 2020

Accounts and Notes Receivable [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

ACCOUNTS AND NOTES RECEIVABLE - NET



(In millions)	March 31, 2020		December 31, 2019		March 31, 2019
Accounts receivable – trade¹	$	5,367	$	4,225	$	4,683
Notes receivable – trade²	412		171		377
Other³	996		1,132		1,447
Total accounts and notes receivable - net	$	6,775	$	5,528	$	6,507

^1.

Accounts receivable – trade is net of allowances of $203 million at March 31, 2020, $174 million at December 31, 2019, and $148 million at March 31, 2019. Allowances are equal to the estimated expected credit losses. The estimate at March 31, 2020 was developed using a loss-rate method. The estimate at December 31, 2019 and March 31, 2019 is based on historical collection experience, current economic and market conditions, and review of the current status of customers' accounts.

^2.

Notes receivable – trade primarily consists of receivables for deferred payment loan programs for the sale of seed products to customers. These loans have terms of one year or less and are primarily concentrated in North America. The company maintains a rigid pre-approval process for extending credit to customers in order to manage overall risk and exposure associated with credit losses. As of March 31, 2020, December 31, 2019, and March 31, 2019 there were no additional exposures requiring a reserve in excess of what is already reserved, nor were there any significant impairments related to current loan agreements.


^3.	Other includes receivables in relation to indemnification assets, value added tax, general sales tax and other taxes. No individual group represents more than 10 percent of total receivables. In addition, Other includes amounts due from nonconsolidated affiliates of $140 million, $119 million, and $135 million as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively.

Accounts and notes receivable are carried at the expected amount to be collected, which approximates fair value. The company establishes the allowance for doubtful receivables using a loss-rate method where the loss rate is developed using past events, historical experience, current conditions and forecasts that affect the collectability of the financial assets.

The following table summarizes changes in the allowance for doubtful receivables for the three months ended March 31, 2020:



(In millions)
Balance at December 31, 2019	$	174
Additions charged to expenses	60
Write-offs charged against allowance	(1		)
Recoveries collected	(30		)
Balance at March 31, 2020	$	203

The company enters into various factoring agreements with third-party financial institutions to sell its trade receivables under both recourse and non-recourse agreements in exchange for cash proceeds. These financing arrangements result in a transfer of the company's receivables and risks to the third-party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are derecognized from the Consolidated Balance Sheets upon transfer, and the company receives a payment for the receivables from the third-party within a mutually agreed upon time period. For arrangements involving an element of recourse, which is typically provided through a guarantee of accounts in the event of customer default, the guarantee obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Balance Sheets.

Trade receivables sold under these agreements were $15 million and $3 million for the three months ended March 31, 2020 and 2019. The trade receivables sold that remained outstanding under these agreements which include an element of recourse as of March 31, 2020, December 31, 2019, and March 31, 2019 were $43 million, $171 million, and $25 million, respectively. The net proceeds received are included in cash provided by operating activities in the Consolidated Statements of Cash Flows. The difference between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of receivables in other income - net in the Consolidated Statements of Operations. The loss on sale of receivables was $2 million and $1 million for the three months ended March 31, 2020 and 2019, respectively. The guarantee obligations recorded as of March 31, 2020, December 31, 2019, and March 31, 2019 in the interim Condensed Consolidated Balance Sheets were not material. See Note 14 - Commitments and Contingent Liabilities for additional information on the company’s guarantees.