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Fair Value Measurements | 12 Months Ended
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Sep. 30, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 11. 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. Refer to Note 14, "Retirement Plans," of the notes to consolidated financial statements for fair value tables of pension assets.
|  | Fair Value Measurements Using:
(in millions) |  | Total as of September 30, 2020 |  | 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 |  | $ | 5 |  |  | $ | — |  |  | $ | 5 |  |  | $ | — |
Other noncurrent assets |  |  |  |  |  |  |  |
Interest rate cap |  | — |  |  | — |  |  | — |  |  | — |
Total assets |  | $ | 5 |  |  | $ | — |  |  | $ | 5 |  |  | $ | — |
Other current liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 34 |  |  | $ | — |  |  | $ | 34 |  |  | $ | — |
Cross currency interest rate swaps |  | 1 |  |  | — |  |  | 1 |  |  | — |
Other noncurrent liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 5 |  |  | — |  |  | 5 |  |  | — |
Total liabilities |  | $ | 40 |  |  | $ | — |  |  | $ | 40 |  |  | $ | — |
|  | Fair Value Measurements Using:
(in millions) |  | Total as of September 30, 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 |  | $ | 8 |  |  | $ | — |  |  | $ | 8 |  |  | $ | — |
Cross-currency interest rate swaps |  | 12 |  |  | — |  |  | 12 |  |  | — |
Other noncurrent assets |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 1 |  |  | — |  |  | 1 |  |  | — |
Cross-currency interest rate swaps |  | 1 |  |  | — |  |  | 1 |  |  | — |
Interest rate cap |  | 1 |  |  | — |  |  | 1 |  |  | — |
Total assets |  | $ | 23 |  |  | $ | — |  |  | $ | 23 |  |  | $ | — |
Other current liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | $ | 12 |  |  | $ | — |  |  | $ | 12 |  |  | $ | — |
Other noncurrent liabilities |  |  |  |  |  |  |  |
Foreign currency exchange derivatives |  | 3 |  |  | — |  |  | 3 |  |  | — |
Total liabilities |  | $ | 15 |  |  | $ | — |  |  | $ | 15 |  |  | $ | — |
Valuation Methods Foreign currency exchange derivatives Adient selectively hedges anticipated transactions and net investments 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 September 30, 2020 and 2019, 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. Cross-currency interest rate swaps Adient selectively uses cross-currency interest rate swaps to hedge portions of its net investments. During fiscal 2018, Adient entered into two floating to floating cross-currency interest rate swaps totaling approximately €160 million designated as net investment hedges in Adient's net investment in Europe. One of the cross-currency interest rate swaps was settled during fiscal 2019 while the other was settled during fiscal 2020. During fiscal 2019, Adient entered into one floating to floating cross-currency interest rate swap totaling ¥11 billion designated as a net investment hedge in Adient's net investment in Japan. As of September 30, 2020, Adient had one ¥11 billion cross-currency interest rate swap outstanding. Interest rate caps Adient selectively uses interest rate caps to limit the impact of floating rate interest payment increases on its Term Loan B Agreement. The interest rate caps are designated as cash flow hedges under ASC 815. As of September 30, 2020, Adient had two interest rate caps outstanding totaling approximately $200 million. 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 $4.1 billion and $3.4 billion at September 30, 2020 and 2019, 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://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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