Other financial assets are as follows:

Subsidiaries and joint ventures that do not have a material impact on assets and earnings either individually or in aggregate are not consolidated. They are reflected at fair value, which generally corresponds to amortized cost. This also applies to immaterial associates.

Changes in available-for-sale financial instruments were as follows:

The miscellaneous financial assets comprise the following:

Other financial assets include EUR 36 million (2004: EUR 36 million) pertaining to non-consolidated subsidiaries. The amount pertaining to associates was EUR 3 million (2004: EUR 5 million). No items of other financial assets pertained to other affiliated companies in 2005 or 2004.

Further information on the accounting for receivables from derivative financial instruments is given in Note [33].

Lease agreements in which the other party, as lessee, is to be regarded as the economic owner of the leased assets (finance leases) give rise to accounts receivable in the amount of the discounted future lease payments. These receivables amount to EUR 109 million (2004: EUR 58 million), while the interest portion pertaining to future years amounts to EUR 18 million (2004: EUR 5 million).

The lease payments are due as follows:

23. Other receivables
Other receivables, less write-downs of EUR 14 million (2004: EUR 4 million) are comprised as follows:

Interest receivable on loans consists mainly of interest earned in the fiscal year but not due to be received until after the balance sheet date.

Of the total amount of this item, EUR 5 million (2004: EUR 6 million) was receivable from non-consolidated subsidiaries and EUR 7 million (2004: EUR 5 million) from associates. As in the previous year, there were no such receivables from other affiliated companies.

Total deferred charges include EUR 193 million (2004: EUR 142 million) that is expected to be used up in 2006.

24. Inventories
Of the EUR 5,504 million in inventories carried as of December 31, 2005 (2004: EUR 4,738 million), EUR 814 million (2004: EUR 967 million) represents inventories carried at fair value less costs to sell.

Inventories comprised the following:

The changes in the inventory reserve, which are reflected in the cost of goods sold, were as follows:

25. Trade accounts receivable
Trade accounts receivable include a reserve of EUR 334 million (2004: EUR 273 million) for amounts unlikely to be recovered.

Trade accounts receivable as of December 31, 2005 include EUR 5,162 million (2004: EUR 4,464 million) maturing within one year and EUR 42 million (2004: EUR 11 million) maturing after one year. Of the total
amount, EUR 10 million (2004: EUR 9 million) was receivable from non-consolidated subsidiaries, EUR 36 million (2004: EUR 40 million) from associates, EUR 1 million (2004: EUR 1 million) from other affiliated companies and EUR 5,157 million (2004: EUR 4,425 million) from other customers.

Changes in write-downs of trade accounts receivable are as follows:

26. Liquid assets

Financial instruments with original maturities of up to three months are recognized as cash equivalents in view of their high liquidity. Liquidity totaling EUR 253 million has been deposited in escrow accounts intended solely for making payments relating to antitrust fines and civil law settlements. For further information on legal risks see Note [35].

Marketable securities and other instruments held as of December 31, 2005 and December 31, 2004 were as follows:

27. Changes in stockholders’ equity

The components of stockholders’ equity and their changes during 2005 and 2004 are shown in the following table.

The capital stock of Bayer AG amounts to EUR 1,870 million, as in the previous year, and is divided into 730,341,920 no-par bearer shares of a single class.

Authorized capital totaling EUR 250 million was approved by the Annual Stockholders’ Meeting on April 26, 2002. It expires on April 26, 2007. The authorized capital can be used to increase the capital stock by issuing new shares against cash contributions. The Board of Management is authorized to exclude subscription rights with respect to EUR 100 million of this authorized capital; however, in this case the issue price of the new shares must not be significantly below the market price. Exclusion of subscription rights for a further EUR 150 million is only possible in specific cases.

Further authorized capital in the amount of EUR 374 million was approved by the Annual Stockholders’ Meeting on April 27, 2001. This authorized capital, which expires on April 27, 2006, can be used to increase the capital stock by issuing new shares against non-cash contributions. Subscription rights for existing stockholders are excluded.

Conditional capital of EUR 187 million existed on December 31, 2005. This capital may only be utilized to the extent necessary to issue the requisite number of shares as and when conversion or subscription rights are exercised by the holders of convertible bonds or of warrants conferring subscription rights, respectively, that may be issued by Bayer AG, or Group companies in which Bayer AG holds a direct or indirect interest of at least 90 percent, through April 29, 2009.
 
Capital reserves include the paid-in surplus from the issuance of shares and subscription rights by Bayer AG.

The categories of other reserves and their changes during 2005 and 2004 are shown in the following table.