Dow Chemical 2014 Annual Report Download - page 119

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There were no transfers between Levels 1 and 2 during the year ended December 31, 2014 and $4 million of transfers in the
year ended December 31, 2013.
For assets classified as Level 3 measurements, the fair value is based on significant unobservable inputs including assumptions
where there is little, if any, market activity. The fair value of the Company’s interests held in trade receivable conduits is
determined by calculating the expected amount of cash to be received using the key input of anticipated credit losses in the
portfolio of receivables sold that have not yet been collected. Given the short-term nature of the underlying receivables,
discount rate and prepayments are not factors in determining the fair value of the interests. See Note 15 for further information
on assets classified as Level 3 measurements.
The following table summarizes the changes in fair value measurements using Level 3 inputs for the years ended December 31,
2014 and 2013:
Fair Value Measurements Using Level 3 Inputs for
Interests Held in Trade Receivable Conduits (1)
2014 2013
In millions
Balance at January 1 $ 1,227 $ 1,057
Gain included in earnings (2) 9 —
Purchases 1,171 1,198
Settlements (1,079) (1,028)
Balance at December 31 $ 1,328 $ 1,227
(1) Included in "Accounts and notes receivable – Other" in the consolidated balance sheets.
(2) Included in "Selling, general and administrative expenses" in the consolidated statements
of income.
Fair Value Measurements on a Nonrecurring Basis
The following table summarizes the basis used to measure certain assets and liabilities at fair value on a nonrecurring basis in
the consolidated balance sheets in 2014, 2013 and 2012:
Basis of Fair Value Measurements
on a Nonrecurring Basis
Significant
Other
Unobservable
Inputs Total
In millions (Level 3) Losses
2014
Assets at fair value:
Long-lived assets and other assets $ 4 $ (73)
2013
Assets at fair value:
Long-lived assets, other assets and equity method investments $ 127 $ (178)
2012
Assets at fair value:
Long-lived assets, other assets and equity method investments $ 45 $ (693)
Goodwill $ — $ (220)
2014 Fair Value Measurements on a Nonrecurring Basis
As a result of weakening demand for certain optical and ceramic technologies, the Company recognized a $73 million asset
impairment charge in the fourth quarter of 2014 in the Dow Electronic Materials business. The charge was included in "Cost of
sales" ($23 million) and "Goodwill and other intangible asset impairment losses" ($50 million) in the consolidated statements of
income and reflected in Consumer Solutions. The assets, classified as Level 3 measurements, were written down to $4 million
based on a valuation using unobservable inputs, including assumptions a market participant would use to measure the fair value
of the group of assets, which included projected cash flows.
2013 Fair Value Measurements on a Nonrecurring Basis
As a result of Dow's announcement of its new market-driven growth strategy, the Company recognized a $178 million asset
impairment charge in the fourth quarter of 2013, including charges for manufacturing plant shutdowns. The charge was
included in "Cost of sales" ($175 million) and "Amortization of intangibles" ($3 million) in the consolidated statements of
income and impacted the following businesses/operating segments: Energy & Water Solutions and Performance Monomers