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Guarantees | 12 Months Ended
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Dec. 31, 2022
Guarantees [Abstract] |
Guarantees | NOTE 17: GUARANTEES We extend a variety of financial, market value and product performance guarantees to third parties. These instruments expire on various dates through 2028. Additional guarantees of project performance for which there is no stated value also remain outstanding. A portion of our third party guarantees are subject to indemnification for our benefit for any liabilities that could arise. As of December 31, 2022 and 2021, the following financial guarantees were outstanding:
| December 31, 2022 |  | December 31, 2021
(dollars in millions) | Maximum Potential Payment |  | Carrying Amount of Liability |  | Maximum Potential Payment |  | Carrying Amount of Liability
Commercial aerospace financing arrangements | $ | 304 |  |  | $ | — |  |  | $ | 309 |  |  | $ | 3 |
Third party guarantees | 335 |  |  | 1 |  |  | 511 |  |  | 5 |
We have made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees, net of existing reserves. Collaboration partners’ share of these financing guarantees is $140 million and $141 million at December 31, 2022 and 2021, respectively. We also have obligations arising from sales of certain businesses and assets, including those from representations and warranties and related indemnities for environmental, health and safety, tax and employment matters. The maximum potential payment related to these obligations is not a specified amount as a number of the obligations do not contain financial caps. The carrying amount of liabilities related to these obligations was $97 million and $120 million at December 31, 2022 and 2021, respectively. These primarily relate to environmental liabilities, which are included in our total environmental liabilities as further discussed in “Note 18: Commitments and Contingencies.” We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. We also provide service and warranty policies on our products and extend performance and operating cost guarantees beyond our normal service and warranty policies on some of our products, particularly commercial aircraft engines. In addition, we incur discretionary costs to service our products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability, and are largely estimated based upon historical experience. Adjustments are made to accruals as claims data and historical experience warrant. The changes in the carrying amount of service and product warranties and product performance guarantees for the years ended December 31 were as follows:
(dollars in millions) | 2022 |  | 2021 |  | 2020
Balance as of January 1 | $ | 1,157 |  |  | $ | 1,057 |  |  | $ | 1,033 |
Warranties and performance guarantees issued | 264 |  |  | 380 |  |  | 311 |
Settlements | (284) |  |  | (272) |  |  | (292) |
Other | (28) |  |  | (8) |  |  | 5 |
Balance as of December 31 | $ | 1,109 |  |  | $ | 1,157 |  |  | $ | 1,057 |

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- Definition The entire disclosure for each guarantee obligation, or each group of similar guarantee obligations, including (a) the nature of the guarantee, including its term, how it arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee; (c) the current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee; and (d) the nature of any recourse provisions under the guarantee, and any assets held either as collateral or by third parties, and any relevant related party disclosure. Excludes disclosures about product warranties. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -URI https://asc.fasb.org/topic&trid=2155896 + Details
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