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Fair Value Measurement Of Assets And Liabilities | 9 Months Ended
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Sep. 30, 2022
Fair Value Measurement Of Assets And Liabilities [Abstract] |
Fair Value Measurement Of Assets And Liabilities | 8. Fair value measurement of assets and liabilities Assets and liabilities measured and recorded at fair value on a recurring basis The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:
|  |  |  | Quoted Prices in |  |  |  |  |  |  |  | Quoted Prices in |  |  |  |
|  | Balances as of |  | active markets for |  | Significant other |  | Unobservable |  | Balances as of |  | active markets for |  | Significant other |  | Unobservable
|  | September 30, |  | identical Assets |  | observable inputs |  | inputs |  | December 31, |  | identical Assets |  | observable inputs |  | inputs
Description |  | 2022 |  | (Level 1) |  | (Level 2) |  | (Level 3) |  | 2021 |  | (Level 1) |  | (Level 2) |  | (Level 3)
|  | (In millions)
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market |  | $ 492 |  | $ 492 |  | $ — |  | $ — |  | $ 1,079 |  | $ 1,079 |  | $ — |  | $ —
Foreign government debt securities (1) |  | — |  | — |  | — |  | — |  | 16 |  | 16 |  | — |  | —
Restricted Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market |  | 349 |  | 349 |  | — |  | — |  | 210 |  | 210 |  | — |  | —
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1) |  | — |  | — |  | — |  | — |  | 296 |  | 296 |  | — |  | —
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign government debt securities (Central Bank of Brazil Mandatory Guarantee) (1) |  | 1,013 |  | 1,013 |  | — |  | — |  | 602 |  | 602 |  | — |  | —
U.S. government debt securities (1) |  | 708 |  | 708 |  | — |  | — |  | 150 |  | 150 |  | — |  | —
Foreign government debt securities (1) (2) |  | 88 |  | 88 |  | — |  | — |  | 78 |  | 78 |  | — |  | —
Corporate debt securities |  | 15 |  | 15 |  | — |  | — |  | — |  | — |  | — |  | —
Other Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative instruments |  | 3 |  | — |  | 3 |  | — |  | 17 |  | — |  | — |  | 17
USDC |  | 4 |  | 4 |  | — |  | — |  | — |  | — |  | — |  | —
Customer crypto-assets safeguarding assets |  | 15 |  | — |  | 15 |  | — |  | — |  | — |  | — |  | —
Total Assets |  | $ 2,687 |  | $ 2,669 |  | $ 18 |  | $ — |  | $ 2,448 |  | $ 2,431 |  | $ — |  | $ 17
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and social security payable: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term retention plan |  | $ 44 |  | $ — |  | $ 44 |  | $ — |  | $ 103 |  | $ — |  | $ 103 |  | $ —
Other Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent considerations |  | 9 |  | — |  | — |  | 9 |  | 9 |  | — |  | — |  | 9
Derivative instruments |  | 30 |  | — |  | 30 |  | — |  | 6 |  | — |  | — |  | 6
Customer crypto-assets safeguarding liabilities |  | 15 |  | — |  | 15 |  | — |  | — |  | — |  | — |  | —
Total Liabilities |  | $ 98 |  | $ — |  | $ 89 |  | $ 9 |  | $ 118 |  | $ — |  | $ 103 |  | $ 15
(1)Measured at fair value with impact on the consolidated statement of income for the application of the fair value option. (See Note 2 – Fair value option applied to certain financial instruments.) (2)As of September 30, 2022 and December 31, 2021 includes $15 million and $13 million, respectively, of investments from securitization transactions that are restricted to the payment of amounts due to third-party investors. (See Note 4 - Cash, cash equivalents, restricted cash and cash equivalents and investments.) As of September 30, 2022 and December 31, 2021, the Company’s assets and liabilities were valued at fair value using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets); ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date; and iii) Level 3 inputs: valuations based on unobservable inputs reflecting Company’s assumptions (fair value of derivative instruments is determined considering the prevailing risk free interest rate and spot exchange rate, f air value of contingent considerations is determined based on the probability of achievement of the performance targets arising from each acquisition, as well as the Company’s historical experience with similar arrangements). The following tables summarize the reconciliation of the financial assets and liabilities measured at fair value using Level 3 inputs as of September 30, 2022 and December 31, 2021:
| Nine Months Ended September 30, 2022
| Derivative Instruments, net |  | Contingent Considerations
Balance, beginning of the period | $ | 11 |  | $ | (9)
Net Additions |  | 3 |  |  | —
Settlements |  | 7 |  |  | —
Foreign Currency Translation |  | (5) |  |  | —
Gain (Losses) in Other Comprehensive Income |  | (15) |  |  | —
Gain (Losses) on Income Statement |  | (28) |  |  | —
Transfers out of level 3 |  | 27 |  |  | —
Balance, end of the period | $ | — |  | $ | (9)
| Year Ended December 31, 2021
| Derivative Instruments, net |  | Contingent Considerations
Balance, beginning of the year | $ | (14) |  | $ | (5)
Net Additions |  | 3 |  |  | (4)
Settlements |  | 14 |  |  | —
Foreign Currency Translation |  | (3) |  |  | —
Gain (Losses) in Other Comprehensive Income |  | 11 |  |  | —
Gain (Losses) on Income Statement |  | — |  |  | —
Transfers out of level 3 |  | — |  |  | —
Balance, end of the year | $ | 11 |  | $ | (9)
As of September 30, 2022, the cost and the estimated fair value of the Company’s investment in corporate debt securities classified as available for sale, all with an effective maturity of one year or less, were $15 million. Also, for the nine-month period ended September 30, 2022, proceeds from these sales amounted to $141 million and gross realized gains amounted to less than a million. The cost of these securities was determined under a specific identification basis. Financial assets and liabilities not measured and recorded at fair value As of September 30, 2022 and December 31, 2021, the carrying value of the Company’s financial assets (except for loans receivable) and liabilities (except for the 2026, 2028 and 2031 Notes) not measured at fair value approximated their fair value mainly because of their short-term maturity. These assets and liabilities included cash and cash equivalents, restricted cash and cash equivalents and short-term investments (excluding money markets, corporate debt securities and U.S. and foreign government debt securities), accounts receivable, credit cards receivable and other means of payment, accounts payable and accrued expenses, funds payable to customers, amounts payable due to credit and debit card transactions, salaries and social security payable (excluding variable LTRP), loans payables and other financial liabilities (except for the 2026, 2028 and 2031 Notes) and other liabilities (excluding variable LTRP, contingent considerations and derivative instruments). If these financial instruments were measured at fair value in the financial statements, cash and restricted cash would be classified as Level 1 and the remaining financial instruments would be classified as Level 2. On the other hand, as of September 30, 2022 and December 31, 2021, the estimated fair value of the loans receivables, which is based on Level 3 inputs, is $1,848 million and $1,260 million, respectively, and were determined based on Company’s assumptions. As of September 30, 2022 and December 31, 2021, the estimated fair value of the 2026 and 2031 Notes, which is based on Level 1 inputs, is $857 million and $1,105 million, respectively. As of September 30, 2022 and December 31, 2021, the estimated fair value of the 2028 Notes, which is based on Level 2 inputs, is $299 million and $331 million, respectively, and were determined based on market interest rates. The rest of the loans payable and other financial liabilities approximate their fair value because the effective interest rates are not materially different from market interest rates. ‎ The following table summarizes the estimated fair value for those financial assets and liabilities of the Company not measured at fair value as of September 30, 2022 and December 31, 2021:
|  | Balances as of |  | Estimated fair value as of |  | Balances as of |  | Estimated fair value as of
|  | September 30, |  | September 30, |  | December 31, |  | December 31,
|  | 2022 |  | 2022 |  | 2021 |  | 2021
|  | (In millions)
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ 963 |  | $ 963 |  | $ 1,490 |  | $ 1,490
Restricted cash and cash equivalents |  | 724 |  | 724 |  | 557 |  | 557
Investments |  | 438 |  | 438 |  | 16 |  | 16
Accounts receivable, net |  | 108 |  | 108 |  | 98 |  | 98
Credit Card receivables and other means of payment, net |  | 2,550 |  | 2,550 |  | 1,839 |  | 1,839
Loans receivable, net |  | 1,766 |  | 1,848 |  | 1,260 |  | 1,260
Total Assets |  | $ 6,549 |  | $ 6,631 |  | $ 5,260 |  | $ 5,260
Liabilities |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ 1,155 |  | $ 1,155 |  | $ 1,036 |  | $ 1,036
Funds payable to customers |  | 2,558 |  | 2,558 |  | 2,393 |  | 2,393
Amounts payable due to credit and debit card transactions |  | 422 |  | 422 |  | 341 |  | 341
Salaries and social security payable |  | 306 |  | 306 |  | 230 |  | 230
Loans payable and other financial liabilities (*) |  | 4,689 |  | 4,311 |  | 3,518 |  | 3,534
Other liabilities |  | 139 |  | 139 |  | 117 |  | 117
Total Liabilities |  | $ 9,269 |  | $ 8,891 |  | $ 7,635 |  | $ 7,651
(*) The fair value of the 2028 Notes (including the conversion option) is disclosed in Note 11.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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