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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2020
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following tables summarize our assets and liabilities that are measured at fair value on a recurring basis.
|  | Basis of fair value measurement |  |
(in millions) | Balance as of June 30, 2020 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3)
Assets |  |  |  |
Foreign exchange contracts | $ | 21 |  | $ | — |  | $ | 21 |  | $ | — |
Marketable equity securities | 3 |  | 3 |  | — |  | — |
Total | $ | 24 |  | $ | 3 |  | $ | 21 |  | $ | — |
Liabilities |  |  |  |
Foreign exchange contracts | $ | 1 |  | $ | — |  | $ | 1 |  | $ | — |
Interest rate contracts | 217 |  | — |  | 217 |  | — |
Contingent payments related to acquisitions | 39 |  | — |  | — |  | 39 |
Total | $ | 257 |  | $ | — |  | $ | 218 |  | $ | 39 |
|  | Basis of fair value measurement |  |
(in millions) | Balance as of December 31, 2019 | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3)
Assets |  |  |  |
Foreign exchange contracts | $ | 11 |  | $ | — |  | $ | 11 |  | $ | — |
Interest rate contracts | 10 |  | — |  | 10 |  | — |
Marketable equity securities | 3 |  | 3 |  | — |  | — |
Total | $ | 24 |  | $ | 3 |  | $ | 21 |  | $ | — |
Liabilities |  |  |  |
Foreign exchange contracts | $ | 2 |  | $ | — |  | $ | 2 |  | $ | — |
Interest rate contracts | 52 |  | — |  | 52 |  | — |
Contingent payments related to acquisitions | 39 |  | — |  | — |  | 39 |
Total | $ | 93 |  | $ | — |  | $ | 54 |  | $ | 39 |
As of June 30, 2020 and December 31, 2019, cash and cash equivalents of $4.1 billion and $3.3 billion, respectively, included money market and other short-term funds of approximately $2.6 billion and $1.7 billion, respectively, which are considered Level 2 in the fair value hierarchy. For assets that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held, without consideration of transaction costs. The majority of the derivatives entered into by us are valued using internal valuation techniques as no quoted market prices exist for such instruments. The principal techniques used to value these instruments are discounted cash flow and Black-Scholes models. The key inputs, which are considered observable and vary depending on the type of derivative, include contractual terms, interest rate yield curves, foreign exchange rates and volatility. Contingent payments related to acquisitions accounted for as business combinations, which consist of milestone payments and sales-based payments, are valued using discounted cash flow techniques. The fair value of milestone payments reflects management’s expectations of probability of payment, and increases as the probability of payment increases or the expected timing of payments is accelerated. The fair value of sales-based payments is based upon probability-weighted future revenue estimates, and increases as revenue estimates increase, probability weighting of higher revenue scenarios increases or the expected timing of payment is accelerated. The following table is a reconciliation of recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions.
| Three months ended June 30, |  |  | Six months ended June 30, |
(in millions) | 2020 | 2019 |  | 2020 | 2019
Fair value at beginning of period | $ | 39 |  | $ | 31 |  |  | $ | 39 |  | $ | 32 |
Additions | — |  | — |  |  | 4 |  | — |
Change in fair value recognized in earnings | — |  | (4) |  |  | (3) |  | (4) |
Payments | — |  | — |  |  | (1) |  | (1) |
Fair value at end of period | $ | 39 |  | $ | 27 |  |  | $ | 39 |  | $ | 27 |
Financial Instruments Not Measured at Fair Value In addition to the financial instruments that we are required to recognize at fair value in the condensed consolidated balance sheets, we have certain financial instruments that are recognized at amortized cost or some basis other than fair value. For these financial instruments, the following table provides the values recognized in the condensed consolidated balance sheets and the estimated fair values as of June 30, 2020 and December 31, 2019.
| Book values |  |  | Fair values(a) |
(in millions) | 2020 | 2019 |  | 2020 | 2019
Liabilities |  |  |  |  |
Short-term debt | $ | 1 |  | $ | 226 |  |  | $ | 1 |  | $ | 226 |
Current maturities of long-term debt and finance lease obligations | 318 |  | 315 |  |  | 318 |  | 315 |
Long-term debt and finance lease obligations | 6,055 |  | 4,809 |  |  | 6,743 |  | 5,156 |
(a) These fair value amounts are classified as Level 2 within the fair value hierarchy as they are estimated based on observable inputs. The carrying value of short-term debt approximates its fair value due to the short-term maturities of the obligations. The estimated fair values of current and long-term debt were computed by multiplying price by the notional amount of the respective debt instruments. Price is calculated using the stated terms of the respective debt instrument and yield curves commensurate with our credit risk. The carrying values of other financial instruments, such as accounts receivable and accounts payable, approximate their fair values due to the short-term maturities of most of those assets and liabilities. Equity investments not measured at fair value are comprised of other equity investments without readily determinable fair values and were $81 million at June 30, 2020 and $73 million at December 31, 2019. Those investments are included in Other non-current assets on our condensed consolidated balance sheets.

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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 http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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