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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Schedule of Derivative Financial Instruments Recognized in Consolidated Balance Sheet | The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets is as follows:
(In millions) | Notional amount |  | Other current assets |  | Other noncurrent assets |  | Other current liabilities |  | Other noncurrent liabilities |  | Type of hedge |  | Term
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts | $ | 1,240 |  |  | $ | 35 |  |  | $ | 2 |  |  | $ | 17 |  |  | $ | 9 |  |  | Cash flow |  | 1 to 36 months
Commodity contracts | 64 |  |  | 4 |  |  | — |  |  | 2 |  |  | — |  |  | Cash flow |  | 1 to 12 months
Total |  |  | $ | 39 |  |  | $ | 2 |  |  | $ | 19 |  |  | $ | 9 |  |  |  |  |
Derivatives not designated as hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts | $ | 4,683 |  |  | $ | 30 |  |  |  |  | $ | 14 |  |  |  |  |  |  | 1 to 12 months
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives designated as hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Fixed-to-floating interest rate swaps | $ | 1,800 |  |  | $ | 22 |  |  | $ | 29 |  |  | $ | — |  |  | $ | — |  |  | Fair value |  | 8 months to 13 years
Forward starting floating-to-fixed interest rate swaps | 1,350 |  |  | — |  |  | 38 |  |  | — |  |  | 79 |  |  | Cash flow |  | 11 to 31 years
Currency exchange contracts | 1,212 |  |  | 17 |  |  | 2 |  |  | 11 |  |  | 3 |  |  | Cash flow |  | 1 to 36 months
Commodity contracts | 50 |  |  | 2 |  |  | — |  |  | 1 |  |  | — |  |  | Cash flow |  | 1 to 12 months
Total |  |  | $ | 41 |  |  | $ | 69 |  |  | $ | 12 |  |  | $ | 82 |  |  |  |  |
Derivatives not designated as hedges |  |  |  |  |  |  |  |  |  |  |  |  |
Currency exchange contracts | $ | 5,285 |  |  | $ | 34 |  |  |  |  | $ | 9 |  |  |  |  |  |  | 1 to 12 months
Commodity contracts | 62 |  |  | 1 |  |  |  |  | 1 |  |  |  |  |  |  | 1 month
Total |  |  | $ | 35 |  |  |  |  | $ | 10 |  |  |  |  |  |  |
The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:
(In millions) | Carrying amount of the hedged assets (liabilities) |  | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets | December 31, 2022 |  |  | December 31, 2021 |  | December 31, 2022 |  | December 31, 2021 |
Long-term debt | $ | (713) |  |  |  | $ | (2,413) |  |  | $ | (48) |  |  | $ | (84) |  |
(a) At December 31, 2022 and 2021, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $48 million and $33 million, respectively.
Schedule of Notional Amounts of Outstanding Derivative Positions and Commodity Contracts | As of December 31, 2022, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
Commodity |  | December 31, 2022 |  |  |  | Term
Aluminum |  | 4 |  |  | Millions of pounds |  | 1 to 12 months
Copper |  | 10 |  |  | Millions of pounds |  | 1 to 12 months
Gold |  | 1,604 |  |  | Troy ounces |  | 1 to 12 months
Silver |  | 699,932 |  |  | Troy ounces |  | 1 to 12 months
Schedule of Impact of Hedging Activities to Consolidated Statement of Income | The impact of hedging activities to the Consolidated Statements of Income is as follows:
| 2022 |  |
(In millions) | Net sales |  | Cost of products sold |  | Interest expense - net |  |
Amounts from Consolidated Statements of Income | $ | 20,752 |  |  | $ | 13,865 |  |  | $ | 144 |  |  |
Gain (loss) on derivatives designated as cash flow hedges |  |  |  |  |  |  |
Forward starting floating-to-fixed interest rate swaps |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | — |  |  | $ | (4) |  |  |
Derivative designated as hedging instrument | — |  |  | — |  |  | 4 |  |  |
Currency exchange contracts |  |  |  |  |  |  |
Hedged item | $ | 17 |  |  | $ | (26) |  |  | $ | — |  |  |
Derivative designated as hedging instrument | (17) |  |  | 26 |  |  | — |  |  |
Commodity contracts |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | 4 |  |  | $ | — |  |  |
Derivative designated as hedging instrument | — |  |  | (4) |  |  | — |  |  |
Gain (loss) on derivatives designated as fair value hedges |  |  |  |  |  |  |
Fixed-to-floating interest rate swaps |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | — |  |  | $ | 8 |  |  |
Derivative designated as hedging instrument | — |  |  | — |  |  | (8) |  |  |
| 2021 |  |
(In millions) | Net sales |  | Cost of products sold |  | Interest expense - net |  |
Amounts from Consolidated Statements of Income | $ | 19,628 |  |  | $ | 13,293 |  |  | $ | 144 |  |  |
Gain (loss) on derivatives designated as cash flow hedges |  |  |  |  |  |  |
Currency exchange contracts |  |  |  |  |  |  |
Hedged item | $ | 6 |  |  | $ | — |  |  | $ | — |  |  |
Derivative designated as hedging instrument | (6) |  |  | — |  |  | — |  |  |
Commodity contracts |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | (9) |  |  | $ | — |  |  |
Derivative designated as hedging instrument | — |  |  | 9 |  |  | — |  |  |
Gain (loss) on derivatives designated as fair value hedges |  |  |  |  |  |  |
Fixed-to-floating interest rate swaps |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | — |  |  | $ | 51 |  |  |
Derivative designated as hedging instrument | — |  |  | — |  |  | (51) |  |  |
| 2020 |  |
(In millions) | Net sales |  | Cost of products sold |  | Interest expense - net |  |
Amounts from Consolidated Statements of Income | $ | 17,858 |  |  | $ | 12,408 |  |  | $ | 149 |  |  |
Gain (loss) on derivatives designated as cash flow hedges |  |  |  |  |  |  |
Currency exchange contracts |  |  |  |  |  |  |
Hedged item | $ | 13 |  |  | $ | 5 |  |  | $ | — |  |  |
Derivative designated as hedging instrument | (13) |  |  | (5) |  |  | — |  |  |
Commodity contracts |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | (1) |  |  | $ | — |  |  |
Derivative designated as hedging instrument | — |  |  | 1 |  |  | — |  |  |
Gain (loss) on derivatives designated as fair value hedges |  |  |  |  |  |  |
Fixed-to-floating interest rate swaps |  |  |  |  |  |  |
Hedged item | $ | — |  |  | $ | — |  |  | $ | (45) |  |  |
Derivative designated as hedging instrument | — |  |  | — |  |  | 45 |  |  |
Schedule of Amounts Recognized in Net Income | The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:
| Gain (loss) recognized in Consolidated Statements of Income |  |  |  | Consolidated Statements of Income classification
(In millions) | 2022 |  | 2021 |  | 2020 |  |  |  |
Gain (loss) on derivatives not designated as hedges |  |  |  |  |  |  |  |  |
Currency exchange contracts | $ | (56) |  |  | $ | — |  |  | $ | 72 |  |  |  |  | Interest expense - net
Commodity contracts | (15) |  |  | 11 |  |  | 4 |  |  |  |  | Other expense (income) - net and Cost of products sold (a)
Total | $ | (71) |  |  | $ | 11 |  |  | $ | 76 |  |  |  |  |
(a) In 2022, Eaton changed the presentation of gains and losses associated with derivative contracts for commodities that are not designated as hedges from Cost of product sold to Other expense (income) - net on the Consolidated Statements of Income. Prior period amounts have not been reclassified as they are not material.
Schedule of Amounts Recognized in Accumulated Other Comprehensive Income (Loss) | The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income is as follows:
| Gain (loss) recognized in other comprehensive (loss) income
(In millions) | 2022 |  | 2021 |  | 2020
Derivatives designated as cash flow hedges |  |  |  |  |
Forward starting floating-to-fixed interest rate swaps | $ | 202 |  |  | $ | 50 |  |  | $ | (52) |
Currency exchange contracts | 13 |  |  | (6) |  |  | (13) |
Commodity contracts | (5) |  |  | 6 |  |  | 5 |
Non-derivative designated as net investment hedges |  |  |  |  |
Foreign currency denominated debt | 171 |  |  | 240 |  |  | (173) |
Total | $ | 381 |  |  | $ | 290 |  |  | $ | (233) |
| Location of gain (loss) reclassified from Accumulated other comprehensive loss |  | Gain (loss) reclassified from Accumulated other comprehensive loss
(In millions) |  |  | 2022 |  | 2021 |  | 2020
Derivatives designated as cash flow hedges |  |  |  |  |  |  |
Forward starting floating-to-fixed interest rate swaps | Interest expense - net |  | $ | 4 |  |  | $ | — |  |  | $ | — |
Currency exchange contracts | Net sales and Cost of products sold |  | 9 |  |  | (6) |  |  | (18) |
Commodity contracts | Cost of products sold |  | (4) |  |  | 9 |  |  | 1 |
Non-derivative designated as net investment hedges |  |  |  |  |  |  |
Foreign currency denominated debt | Interest expense - net |  | — |  |  | — |  |  | — |
Total |  |  | $ | 9 |  |  | $ | 3 |  |  | $ | (17) |

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