Chevron 2011 Annual Report Download - page 45

Chevron Corporation 2011 Annual Report 43
Note 9 Fair Value Measurements – Continued
Derivatives classied as Level 2 include swaps, options,
and forward contracts principally with nancial institutions
and other oil and gas companies, the fair values of which are
obtained from third-party broker quotes, industry pricing
services and exchanges. e company obtains multiple sources
of pricing information for the Level 2 instruments. Since this
pricing information is generated from observable market data,
it has historically been very consistent. e company does
not materially adjust this information. e company incorpo-
rates internal review, evaluation and assessment procedures,
including a comparison of Level 2 fair values derived from the
company’s internally developed forward curves (on a sample
basis) with the pricing information to document reasonable,
logical and supportable fair value determinations and proper
level of classication.
Impairments of “Properties, plant and equipment” e company
did not have any material long-lived assets measured at fair
value on a nonrecurring basis to report in 2011 or 2010.
Impairments of “Investments and advances” e company did
not have any material investments and advances measured at
fair value on a nonrecurring basis to report in 2011 or 2010.
Assets and Liabilities Not Required to Be Measured at Fair
Value e company holds cash equivalents and bank time
deposits in U.S. and non-U.S. portfolios. e instruments
classied as cash equivalents are primarily bank time depos-
its with maturities of 90 days or less and money market
funds. “Cash and cash equivalents” had carrying/fair values
of $15,864 and $14,060 at December 31, 2011, and Decem-
ber 31, 2010, respectively. e instruments held in “Time
deposits” are bank time deposits with maturities greater than
90 days, and had carrying/fair values of $3,958 and $2,855
at December 31, 2011, and December 31, 2010, respectively.
e fair values of cash, cash equivalents and bank time
deposits reect the cash that would have been received if the
instruments were settled at December 31, 2011.
“Cash and cash equivalents” do not include investments
with a carrying/fair value of $1,240 and $855 at December
31, 2011, and December 31, 2010, respectively. At December
31, 2011, these investments include restricted funds related to
various capital-investment projects, acquisitions pending tax
deferred exchanges, and Upstream abandonment activities
which are reported in “Deferred charges and other assets” on
the Consolidated Balance Sheet. Long-term debt of $4,101 and
$5,636 at December 31, 2011, and December 31, 2010, had
estimated fair values of $4,928 and $6,311, respectively.
e carrying values of short-term nancial assets and
liabilities on the Consolidated Balance Sheet approximate their
fair values. Fair value remeasurements of other nancial instru-
ments at December 31, 2011 and 2010 were not material.
e fair value hierarchy for assets and liabilities measured at fair value on a nonrecurring basis at December 31, 2011, is as follows:
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
At December 31 At December 31
Total Level 1 Level 2 Level 3
Before-Tax
Loss
Year 2011 Total Level 1 Level 2 Level 3
Before-Tax
Loss
Year 2010
Properties, plant and
equipment, net
(held and used) $ 67 $ – $ – $ 67 $ 81 $ 57 $ – $ – $ 57 $ 85
Properties, plant and
equipment, net
(held for sale) 167 – 167 – 54 13 – – 13 36
Investments and advances – – – – 108 – – – – 15
Total Nonrecurring
Assets at Fair Value $ 234 $ – $ 167 $ 67 $ 243 $ 70 $ – $ – $ 70 $ 136