Deferred tax liability



|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| [Table of Contents](#i35a0317244714ddbbfcfc1f7731c8932_7) | emn-20220630_g1.jpg |  |

  
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSThe major classes of divested assets and liabilities as of the date of the divestiture were as follows:  


|  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |
| (Dollars in millions) |  |
| Assets divested |  |
| Trade receivables, net of allowance for doubtful accounts | $ | 129  |  |
| Inventories | 163  |  |
| Other assets | 21  |  |
| Properties, net of accumulated depreciation | 303  |  |
| Goodwill | 399  |  |
| Intangible assets, net of accumulated amortization | 14  |  |
| Assets divested | 1,029  |  |
| Liabilities divested |  |
| Payables and other liabilities | 86  |  |
| Deferred tax liability | 7  |  |
| Other liabilities | 4  |  |
| Liabilities divested | 97  |  |
| Disposal group, net | $ | 932  |  |

  
The Company recognized $8 million and $3 million of transaction costs for the divested business in first six months 2022 and twelve months 2021, respectively. Transaction costs are expensed as incurred and are included in SG&A in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.  
3.INVENTORIES

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | June 30, |  | December 31, |
| (Dollars in millions) | 2022 |  | 2021 |
| Finished goods | $ | 1,241  |  |  | $ | 1,007  |  |
| Work in process | 283  |  |  | 273  |  |
| Raw materials and supplies | 692  |  |  | 589  |  |
| Total inventories at FIFO or average cost | 2,216  |  |  | 1,869  |  |
| Less: LIFO reserve | 390  |  |  | 365  |  |
| Total inventories | $ | 1,826  |  |  | $ | 1,504  |  |

  
Inventories valued on the last-in, first-out ("LIFO") method were approximately 50 percent of total inventories at both June 30, 2022 and December 31, 2021.  
11
