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Loans Payable, Long-Term Debt and Leases | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
Loans Payable, Long-Term Debt and Leases | Loans Payable, Long-Term Debt and Leases Loans Payable Loans payable at December 31, 2020 included $2.3 billion of notes due in 2021, $4.0 billion of commercial paper and $73 million of long-dated notes that are subject to repayment at the option of the holders. Loans payable at December 31, 2019 included $1.9 billion of notes due in 2020, $1.4 billion of commercial paper and $226 million of long-dated notes that are subject to repayment at the option of the holders. The weighted-average interest rate of commercial paper borrowings was 0.79% and 2.23% for the years ended December 31, 2020 and 2019, respectively. Long-Term Debt Long-term debt at December 31 consisted of:
| 2020 |  | 2019
2.75% notes due 2025 | $ | 2,493 |  |  | $ | 2,492 |
3.70% notes due 2045 | 1,976 |  |  | 1,975 |
2.80% notes due 2023 | 1,748 |  |  | 1,747 |
3.40% notes due 2029 | 1,734 |  |  | 1,732 |
4.00% notes due 2049 | 1,469 |  |  | 1,468 |
2.35% notes due 2022 | 1,269 |  |  | 1,248 |
4.15% notes due 2043 | 1,238 |  |  | 1,238 |
1.45% notes due 2030 | 1,233 |  |  | — |
1.875% euro-denominated notes due 2026 | 1,218 |  |  | 1,107 |
2.45% notes due 2050 | 1,211 |  |  | — |
2.40% notes due 2022 | 1,032 |  |  | 1,010 |
0.75% notes due 2026 | 991 |  |  | — |
3.90% notes due 2039 | 983 |  |  | 982 |
2.35% notes due 2040 | 982 |  |  | — |
2.90% notes due 2024 | 746 |  |  | 745 |
6.50% notes due 2033 | 719 |  |  | 722 |
0.50% euro-denominated notes due 2024 | 611 |  |  | 555 |
1.375% euro-denominated notes due 2036 | 606 |  |  | 551 |
2.50% euro-denominated notes due 2034 | 605 |  |  | 550 |
3.60% notes due 2042 | 491 |  |  | 490 |
6.55% notes due 2037 | 411 |  |  | 412 |
5.75% notes due 2036 | 338 |  |  | 338 |
5.95% debentures due 2028 | 306 |  |  | 306 |
5.85% notes due 2039 | 271 |  |  | 271 |
6.40% debentures due 2028 | 250 |  |  | 250 |
6.30% debentures due 2026 | 135 |  |  | 135 |
3.875% notes due 2021 | — |  |  | 1,151 |
1.125% euro-denominated notes due 2021 | — |  |  | 1,113 |
Other | 294 |  |  | 148 |
| $ | 25,360 |  |  | $ | 22,736 |
Other (as presented in the table above) includes $294 million and $147 million at December 31, 2020 and 2019, respectively, of borrowings at variable rates that resulted in effective interest rates of 0.45% and 2.54% for 2020 and 2019, respectively. With the exception of the 6.30% debentures due 2026, the notes listed in the table above are redeemable in whole or in part, at Merck’s option at any time, at varying redemption prices. In June 2020, the Company issued $4.5 billion principal amount of senior unsecured notes consisting of $1.0 billion of 0.75% notes due 2026, $1.25 billion of 1.45% notes due 2030, $1.0 billion of 2.35% notes due 2040 and $1.25 billion of 2.45% notes due 2050. Merck used the net proceeds from the offering for general corporate purposes, including without limitation the repayment of outstanding commercial paper borrowings and other indebtedness with upcoming maturities. Effective as of November 3, 2009, the Company executed a full and unconditional guarantee of the then existing debt of its subsidiary Merck Sharp & Dohme Corp. (MSD) and MSD executed a full and unconditional guarantee of the then existing debt of the Company (excluding commercial paper), including for payments of principal and interest. These guarantees do not extend to debt issued subsequent to that date. Certain of the Company’s borrowings require that Merck comply with covenants and, at December 31, 2020, the Company was in compliance with these covenants. The aggregate maturities of long-term debt for each of the next five years are as follows: 2021, $2.3 billion; 2022, $2.3 billion; 2023, $1.7 billion; 2024, $1.4 billion; 2025, $2.5 billion. The Company has a $6.0 billion credit facility that matures in June 2024. The facility provides backup liquidity for the Company’s commercial paper borrowing facility and is to be used for general corporate purposes. The Company has not drawn funding from this facility. Leases The Company has operating leases primarily for manufacturing facilities, research and development facilities, corporate offices, employee housing, vehicles and certain equipment. The Company determines if an arrangement is a lease at inception. When evaluating contracts for embedded leases, the Company exercises judgment to determine if there is an explicit or implicit identified asset in the contract and if Merck controls the use of that asset. Embedded leases, primarily associated with contract manufacturing organizations, are immaterial. The lease term includes options to extend or terminate the lease when it is reasonably certain that Merck will exercise that option. Real estate leases for facilities have an average remaining lease term of eight years, which include options to extend the leases for up to four years where applicable. Vehicle leases are generally in effect for four years. The Company does not record short-term leases (leases with an initial term of 12 months or less) on the balance sheet; however, Merck currently has no short-term leases. Lease expense for operating lease payments is recognized on a straight-line basis over the term of the lease. Operating lease assets and liabilities are recognized based on the present value of lease payments over the lease term. Since the Company’s leases do not have a readily determinable implicit discount rate, the Company uses its incremental borrowing rate to calculate the present value of lease payments by asset class. On a quarterly basis, an updated incremental borrowing rate is determined based on the average remaining lease term of each asset class and the Company’s pretax cost of debt for that same term. The updated rates for each asset class are applied prospectively to new leases. The Company does not separate lease components (e.g. payments for rent, real estate taxes and insurance costs) from non-lease components (e.g. common-area maintenance costs) in the event that the agreement contains both. Merck includes both the lease and non-lease components for purposes of calculating the right-of-use asset and related lease liability (if the non-lease components are fixed). For vehicle leases and employee housing, the Company applies a portfolio approach to effectively account for the operating lease assets and liabilities. Certain of the Company’s lease agreements contain variable lease payments that are adjusted periodically for inflation or for actual operating expense true-ups compared with estimated amounts; however, these amounts are immaterial. Sublease income and activity related to sale and leaseback transactions are immaterial. Merck’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating lease cost was $346 million in 2020 and $339 million in 2019. Rental expense under operating leases, net of sublease income, was $322 million in 2018. Cash paid for amounts included in the measurement of operating lease liabilities was $340 million in 2020 and $281 million in 2019. Operating lease assets obtained in exchange for lease obligations was $495 million in 2020 and $129 million in 2019. Supplemental balance sheet information related to operating leases is as follows:
December 31 | 2020 |  | 2019 |  |
Assets |  |  |  |  |
Other Assets (1) | $ | 1,725 |  |  | $ | 1,073 |  |  |
Liabilities |  |  |  |  |
Accrued and other current liabilities | 300 |  |  | 236 |  |  |
Other Noncurrent Liabilities | 1,362 |  |  | 768 |  |  |
| $ | 1,662 |  |  | $ | 1,004 |  |  |
Weighted-average remaining lease term (years) | 8.0 |  | 7.4 |  |
Weighted-average discount rate | 2.8 | % |  | 3.2 | % |  |
(1) Includes prepaid leases that have no related lease liability. Maturities of operating leases liabilities are as follows:
2021 | $ | 336 |
2022 | 277 |
2023 | 252 |
2024 | 187 |
2025 | 162 |
Thereafter | 665 |
Total lease payments | 1,879 |
Less: Imputed interest | 217 |
| $ | 1,662 |
At December 31, 2020, the Company had entered into additional real estate operating leases that had not yet commenced; the obligations associated with these leases total $475 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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