Boeing 2011 Annual Report Download - page 111
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Note 20 – Fair Value Measurements
The following table presents our assets and liabilities that are measured at fair value on a recurring
basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels
based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values
determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values
estimated using significant other observable inputs and Level 3 includes fair values estimated using
significant non-observable inputs.
December 31, 2011 December 31, 2010
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets
Money market funds $3,104 $3,104 $3,337 $3,337
Available-for-sale investments 10 5 $5 15 10 $5
Derivatives 155 $ 155 227 $ 227
Total assets $3,269 $3,109 $ 155 $5 $3,579 $3,347 $ 227 $5
Liabilities
Derivatives $ (131) $(131) $ (115) $(115)
Total liabilities $ (131) $(131) $ (115) $(115)
Money market funds and available-for-sale equity securities are valued using a market approach based
on the quoted market prices of identical instruments. Available-for-sale debt investments are primarily
valued using an income approach based on benchmark yields, reported trades and broker/dealer
quotes.
Derivatives include foreign currency, commodity and interest rate contracts. Our foreign currency
forward contracts are valued using an income approach based on the present value of the forward rate
less the contract rate multiplied by the notional amount. Commodity derivatives are valued using an
income approach based on the present value of the commodity index prices less the contract rate
multiplied by the notional amount. The fair value of our interest rate swaps is derived from a discounted
cash flow analysis based on the terms of the contract and the interest rate curve.
Certain assets have been measured at fair value on a nonrecurring basis using significant
unobservable inputs (Level 3). The following table presents the nonrecurring losses recognized for the
years ended December 31, and the carrying value and asset classification of the related assets as of
December 31:
2011 2010
Carrying
Value
Total
Losses
Carrying
Value
Total
Losses
Operating lease equipment $72 $ (64) $247 $(143)
Property, plant and equipment 3 (35) (4)
Other assets, Acquired intangible assets, Cost investment 20 (11)
Total $95 $(110) $247 $(147)
The operating lease equipment was valued using a market approach based on the fair value of the
related aircraft. Property, plant and equipment, Other assets, and Acquired intangible assets were
valued using an income approach based on the discounted cash flows associated with the underlying
assets. The cost investment was valued using a market approach based on quoted market prices for
related investments.
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