IBM 2015 Annual Report Download - page 102

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Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
100
($ inmillions)
At December 31, 2014: Level 1 Level 2 Level 3 Total
Assets
Cash equivalents
(1)
Time deposits and certifi cates of deposit $ — $3,517 $— $3,517
Commercial paper — 764 — 764
Money market funds 662 — — 662
U.S. government securities — 410 — 410
Other securities —6—6
Total 662 4,697 — 5,359 (5)
Debt securities—noncurrent
(2) 18—9
Trading security investments
(2) 74——74
Available-for-sale equity investments
(2) 243 — — 243
Derivative assets
(3)
Interest rate contracts — 633 — 633
Foreign exchange contracts — 775 — 775
Equity contracts —24—24
Total — 1,432 — 1,432 (6)
Total assets $980 $6,138 $— $7,118 (6)
Liabilities
Derivative liabilities
(4)
Foreign exchange contracts $ — $ 177 $— $ 177
Equity contracts —19—19
Total liabilities $ — $ 196 $— $ 196 (6)
(1) Included within cash and cash equivalents in the Consolidated Statement of Financial Position.
(2) Included within investments and sundry assets in the Consolidated Statement of Financial Position.
(3)
The gross balances of derivative assets contained within prepaid expenses and other current assets, and investments and sundry assets in the Consolidated Statement
of Financial Position at December31, 2014 were $751million and $681million, respectively.
(4) The gross balances of derivative liabilities contained within other accrued expenses and liabilities, and other liabilities in the Consolidated Statement of Financial Position
at December31, 2014 were $165million and $31million, respectively.
(5) Available-for-sale securities with carrying values that approximate fair value.
(6) If derivative exposures covered by a qualifying master netting agreement had been netted in the Consolidated Statement of Financial Position, the total derivative asset
and liability positions would have been reduced by $97million each.
There were no transfers between Levels 1 and 2 for the year ended
December31, 2015. During the year ended December31, 2014,
the company transferred trading security investments valued at
$74million from Level2 to Level1 due to the expiration of certain
regulatory restrictions.
Financial Assets and Liabilities Not Measured at Fair Value
Short-Term Receivables and Payables
Notes and other accounts receivable and other investments are
financial assets with carrying values that approximate fair value.
Accounts payable, other accrued expenses and short-term debt
(excluding the current portion of long-term debt) are financial lia-
bilities with carrying values that approximate fair value. If measured
at fair value in the financial statements, these financial instruments
would be classified as Level3 in the fair value hierarchy.
Loans and Long-Term Receivables
Fair values are based on discounted future cash flows using cur-
rent interest rates offered for similar loans to clients with similar
credit ratings for the same remaining maturities. At December31,
2015 and 2014, the difference between the carrying amount and
estimated fair value for loans and long-term receivables was
immaterial. If measured at fair value in the financial statements,
these financial instruments would be classified as Level3 in the
fair value hierarchy.
Long-Term Debt
Fair value of publicly traded long-term debt is based on quoted
market prices for the identical liability when traded as an asset
in an active market. For other long-term debt for which a quoted