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Fair Value Measurements | 6 Months Ended
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Mar. 31, 2019
Fair Value Disclosures [Abstract] |
Fair Value Measurements |
9. Fair Value Measurements
ASC 820, "Fair Value Measurement," defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its own assumptions. ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Recurring Fair Value Measurements The following tables present Adient's fair value hierarchy for those assets and liabilities measured at fair value:
|  | Fair Value Measurements Using:
(in millions) |  | Total as of March 31, 2019 |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Other current assets |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 9 |  |  | $ | — |  |  | $ | 9 |  |  | $ | — |
Cross-currency interest rate swaps |  | 20 |  |  | — |  |  | 20 |  |  | — |
Other noncurrent assets |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | — |  |  | — |  |  | — |  |  | — |
Total assets |  | $ | 29 |  |  | $ | — |  |  | $ | 29 |  |  | $ | — |
Other current liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 14 |  |  | $ | — |  |  | $ | 14 |  |  | $ | — |
Other noncurrent liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 1 |  |  | — |  |  | 1 |  |  | — |
Total liabilities |  | $ | 15 |  |  | $ | — |  |  | $ | 15 |  |  | $ | — |
|  | Fair Value Measurements Using:
(in millions) |  | Total as of September 30, 2018 |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Other current assets |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 8 |  |  | $ | — |  |  | $ | 8 |  |  | $ | — |
Other noncurrent assets |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 2 |  |  | — |  |  | 2 |  |  | — |
Cross-currency interest rate swaps |  | 13 |  |  | — |  |  | 13 |  |  | — |
Total assets |  | $ | 23 |  |  | $ | — |  |  | $ | 23 |  |  | $ | — |
Other current liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 11 |  |  | $ | — |  |  | $ | 11 |  |  | $ | — |
Other noncurrent liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 2 |  |  | — |  |  | 2 |  |  | — |
Equity swaps |  | 2 |  |  | — |  |  | 2 |  |  | — |
Total liabilities |  | $ | 15 |  |  | $ | — |  |  | $ | 15 |  |  | $ | — |
Valuation Methods Foreign currency exchange derivatives Adient selectively hedges anticipated transactions that are subject to foreign exchange rate risk primarily using foreign currency exchange hedge contracts. The foreign currency exchange derivatives are valued under a market approach using publicized spot and forward prices. Changes in fair value on foreign exchange derivatives accounted for as hedging instruments under ASC 815 are initially recorded as a component of AOCI and are subsequently reclassified into earnings when the hedged transactions occur and affect earnings. These contracts were highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates at March 31, 2019 and September 30, 2018, respectively. The changes in fair value of foreign currency exchange derivatives not designated as hedging instruments under ASC 815 are recorded in the consolidated statements of income. Equity swaps Adient selectively uses equity swaps to reduce market risk associated with certain of its stock-based compensation plans, such as its deferred compensation plans. The equity swaps are recorded at fair value. Changes in fair value of the equity swaps are reflected in the consolidated statements of income within selling, general and administrative expenses. Cross-currency interest rate swaps Adient selectively uses cross-currency interest rate swaps to hedge portions of its net investment in Europe. The fair value of cash and cash equivalents, accounts receivable, short-term debt and accounts payable approximate their carrying values. The fair value of long-term debt, which was $2.8 billion and $3.3 billion at March 31, 2019 and September 30, 2018, respectively, was determined primarily using market quotes classified as Level 1 inputs within the ASC 820 fair value hierarchy.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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