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DERIVATIVE INSTRUMENTS AND HEDGING TRANSACTIONS | 12 Months Ended
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Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | DERIVATIVES AND HEDGING ACTIVITIES The Company uses derivative financial instruments to manage its risks related to interest rates and foreign currency exchange rate fluctuations. Derivative financial instruments are not used for trading or other speculative purposes. To qualify as a hedge, derivative financial instruments must be evaluated for hedge effectiveness at the inception of the contract and designated as a hedge. Changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception and over the life of the hedge contract. FOREIGN CURRENCY RISK MANAGEMENT The Company operates a global business in a wide variety of foreign currencies. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade. The Company's objective is to preserve the U.S. Dollar value of foreign currency denominated cash flows and earnings. The Company monitors its collective foreign currency exposure and enters into foreign currency exchange forward and option contracts (foreign currency exchange contracts) with third parties, when necessary, to minimize the impact of changes in foreign currency exchange rates. The Company has monetary assets and liabilities denominated in non-functional currencies. Prior to conversion into U.S. dollars, these assets and liabilities are remeasured at spot exchange rates in effect on the balance sheet date. The effects of changes in spot rates are recognized in earnings and included in Other (income) expense. We use foreign currency exchange contracts to hedge our foreign currency exposure. These contracts are marked-to-market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets and liabilities being hedged. The Company uses foreign currency contracts to hedge forecasted sales and purchases, which are denominated in non-functional currencies. Changes in the forecasted non-functional currency cash flows due to movements in exchange rates are substantially offset by changes in the fair value of these foreign currency exchange contracts designated as hedges. Market value gains and losses on these contracts are recognized in earnings when the hedged transaction is recognized. As of December 31, 2020 and 2019, the Company held contracts with notional amounts of $16,123 million and $12,746 million to exchange foreign currencies, principally the U.S. Dollar, Euro, Canadian Dollar, British Pound, Swiss Franc, Mexican Peso, Chinese Renminbi, Indian Rupee, and Malaysian Ringgit. The Company also designates certain foreign currency debt and derivative contracts as hedges against portions of its net investment in foreign operations. Gains or losses of the foreign currency debt and derivative contracts designated as net investment hedges are recorded in the same manner as foreign currency translation adjustments. INTEREST RATE RISK MANAGEMENT Financial instruments, including derivatives, expose the Company to market risk related to changes in interest rates. The Company uses a combination of financial instruments, including long-term, medium-term and short-term financing, variable-rate commercial paper, and interest rate swaps to convert the interest rate mix of our total debt portfolio and related overall cost of borrowing. CREDIT RISK MANAGEMENT The Company continues to monitor the creditworthiness of its counterparties to mitigate the risk of nonperformance. Financial instruments, including derivatives, expose the Company to counterparty credit risk. In addition, the Company grants credit terms to its customers in the normal course of business. The terms and conditions of our credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. Our sales are not materially dependent on a single customer or a small group of customers. DERIVATIVE AND HEDGING INSTRUMENTS The following table summarizes the notional amounts and fair values of the Company’s outstanding derivatives by risk category and instrument type within the Consolidated Balance Sheet as of December 31, 2020 and 2019:
| Notional |  | Fair Value Asset |  | Fair Value (Liability)
December 31, 2020 |  | December 31, 2019 |  | December 31, 2020 |  | December 31, 2019 |  | December 31, 2020 |  | December 31, 2019
Derivatives in Fair Value Hedging Relationships: |  |  |  |  |  |  |  |  |  |  |
Interest rate swap agreements | $ | 3,950 |  |  | $ | 3,950 |  |  | $ | 194 |  |  | $ | 38 |  |  | $ | — |  |  | $ | (13) |
Derivatives in Cash Flow Hedging Relationships: |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts | 488 |  |  | 3,340 |  |  | 65 |  |  | 218 |  |  | (58) |  |  | (16) |
Derivatives in Net Investment Hedging Relationships: |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts | 806 |  |  | 866 |  |  | 45 |  |  | 71 |  |  | (1) |  |  | — |
Cross currency swap agreements | 1,200 |  |  | 1,200 |  |  | — |  |  | 51 |  |  | (50) |  |  | — |
Total Derivatives Designated as Hedging Instruments | 6,444 |  |  | 9,356 |  |  | 304 |  |  | 378 |  |  | (109) |  |  | (29) |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts | 14,829 |  |  | 8,540 |  |  | 92 |  |  | 2 |  |  | (91) |  |  | (5) |
Total Derivatives at Fair Value | $ | 21,273 |  |  | $ | 17,896 |  |  | $ | 396 |  |  | $ | 380 |  |  | $ | (200) |  |  | $ | (34) |
All derivative assets are presented in Other current assets or Other assets. All derivative liabilities are presented in Accrued liabilities or Other liabilities. As of December 31, 2020, cash collateral received that has not been offset against our derivatives of $34 million was recorded in Accrued liabilities and Other assets. In addition to the foreign currency derivative contracts designated as net investment hedges, certain of the Company's foreign currency denominated debt instruments are designated as net investment hedges. The carrying value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency transaction gain or loss on those instruments, was $4,414 million and $6,882 million as of December 31, 2020 and 2019. Interest rate swap agreements are designated as hedge relationships with gains or losses on the derivative recognized in Interest and other financial charges offsetting the gains and losses on the underlying debt being hedged. Gains and losses on interest rate swap agreements recognized in earnings were $169 million of income, $70 million of income and $37 million of expense for the years ended December 31, 2020, 2019 and 2018. Gains and losses are fully offset by losses and gains on the underlying debt being hedged. The following table sets forth the amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges:
Line in the Consolidated Balance Sheet of Hedged Item | Carrying Amount of the Hedged Item |  | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Item
December 31, 2020 |  | December 31, 2019 |  | December 31, 2020 |  | December 31, 2019
Long-term debt | $ | 4,144 |  |  | $ | 3,975 |  |  | $ | 194 |  |  | $ | 25 |
The following tables summarize the location and impact to the Consolidated Statement of Operations related to derivative instruments:
| Year Ended December 31, 2020
Revenue |  | Cost of Products and Services Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 32,637 |  |  | $ | 22,169 |  |  | $ | 4,772 |  |  | $ | (675) |  |  | $ | 359 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | (3) |  |  | 54 |  |  | (4) |  |  | 28 |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 13 |  |  | — |  |  | 29 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest Rate Swap Agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (169) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 169 |
Gain or (loss) on net investment hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | — |  |  | — |  |  | — |  |  | 18 |
Gain or (loss) on derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts | — |  |  | — |  |  | — |  |  | (166) |  |  | — |
| Year Ended December 31, 2019
Revenue |  | Cost of Products and Services Sold |  | SG&A |  | Other (Income) Expense |  | Interest and Other Financial Charges
| $ | 36,709 |  |  | $ | 24,339 |  |  | $ | 5,519 |  |  | $ | (1,065) |  |  | $ | 357 |
Gain or (loss) on cash flow hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount reclassified from accumulated other comprehensive income into income | 3 |  |  | 44 |  |  | 1 |  |  | 73 |  |  | — |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | 22 |  |  | — |  |  | 35 |  |  | — |
Gain or (loss) on fair value hedges: |  |  |  |  |  |  |  |  |
Interest Rate Swap Agreements: |  |  |  |  |  |  |  |  |
Hedged items | — |  |  | — |  |  | — |  |  | — |  |  | (70) |
Derivatives designated as hedges | — |  |  | — |  |  | — |  |  | — |  |  | 70 |
Gain or (loss) on net investment hedges: |  |  |  |  |  |  |  |  |
Foreign Currency Exchange Contracts: |  |  |  |  |  |  |  |  |
Amount excluded from effectiveness testing recognized in earnings using an amortization approach | — |  |  | — |  |  | — |  |  | — |  |  | 19 |
Gain or (loss) on derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Foreign currency exchange contracts | — |  |  | — |  |  | — |  |  | 106 |  |  | — |
As of December 31, 2020, the Company estimates that approximately $8 million of net derivative gains related to its cash flow hedges included in Accumulated other comprehensive income (loss) will be reclassified into earnings within the next 12 months. The following table summarizes the amounts of gain or (loss) on net investment hedges recognized in Accumulated other comprehensive income (loss):
Derivatives Net Investment Hedging Relationships | Years Ended December 31,
2020 |  | 2019
Euro-denominated long-term debt | $ | (256) |  |  | $ | 68 |
Euro-denominated commercial paper | (8) |  |  | 71 |
Cross currency swap | (109) |  |  | 32 |
Foreign currency exchange contracts | (94) |  |  | 23 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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