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FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2021
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
The fair value hierarchy consists of the following three levels:
•Level 1 — Quoted prices in active markets that we have the ability to access for identical assets or liabilities;
•Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations in which all significant inputs are observable in the market; and
•Level 3 — Valuations using significant inputs that are unobservable in the market and include the use of judgment by management about the assumptions market participants would use in pricing the asset or liability.
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 December 31,
2021		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$8 $— $8 $— 
Debt securities30 — — 30 
Marketable equity securities 10 10 — — 
Total$48 $10 $8 $30 
Liabilities
Foreign exchange contracts$5 $— $5 $— 
Contingent payments related to acquisitions143 — — 143 
Total$148 $— $5 $143 
Basis of fair value measurement
(in millions)Balance as of December 31,
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$11 $— $11 $— 
Debt securities13 — 13 — 
Marketable equity securities17 17 — — 
Total$41 $17 $24 $— 
Liabilities
Foreign exchange contracts$19 $— $19 $— 
Contingent payments related to acquisitions30 — — 30 
Total$49 $— $19 $30 
As of December 31, 2021 and 2020, cash and cash equivalents of $3.0 billion and $3.7 billion, respectively, included money market and other short-term funds of approximately $816 million and $1.8 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.
Debt securities were reclassified to Level 3 as of December 31, 2021 because there were no observable transactions for those debt securities near the balance sheet date. There was no change in the estimated fair value of those debt securities for the year ended December 31, 2021.
Contingent payments related to acquisitions, 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 our recurring fair value measurements that use significant unobservable inputs (Level 3), which consist of contingent payments related to acquisitions.
as of and for the years ended December 31 (in millions)20212020
Fair value at beginning of period$30 $39 
Additions135 4 
Change in fair value recognized in earnings(6)(2)
Payments(16)(11)
Fair value at end of period$143 $30 
Financial Instruments Not Measured at Fair Value
In addition to the financial instruments that we are required to recognize at fair value in the 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 consolidated
balance sheets and the estimated fair values.
Book valuesFair values(a)
as of December 31 (in millions)2021202020212020
Liabilities
Short-term debt$301 $— $301 $— 
Current maturities of long-term debt and finance lease obligations210 406 212 409 
Long-term debt and finance lease obligations17,149 5,786 17,568 6,471 
(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 $114 million and $105 million at December 31, 2021 and 2020, respectively. These amounts are included in Other non-current assets on our consolidated balance sheets.