Dow Chemical 2015 Annual Report Download - page 112

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There were no transfers between Levels 1 and 2 during the years ended December 31, 2015 and December 31, 2014.
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 16 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,
2015 and 2014:
Fair Value Measurements Using Level 3 Inputs for
Interests Held in Trade Receivable Conduits (1)
2015 2014
In millions
Balance at January 1 $ 1,328 $ 1,227
Gain included in earnings (2) 2 9
Purchases 647 1,171
Settlements (1,034) (1,079)
Balance at December 31 $ 943 $ 1,328
(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 2015, 2014 and 2013:
Basis of Fair Value Measurements
on a Nonrecurring Basis
Significant
Other
Unobservable
Inputs Total
In millions (Level 3) Losses
2015
Assets at fair value:
Long-lived assets, equity method investments, investments and other assets $ 24 $ (313)
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)
2015 Fair Value Measurements on a Nonrecurring Basis
As part of the 2015 restructuring plan that was approved on April 29, 2015, the Company will shut down a number of
manufacturing facilities. The manufacturing assets and facilities associated with this plan, classified as Level 3 measurements,
were written down to $7 million using unobservable inputs, including assumptions a market participant would use to measure
the fair value of the group of assets. In addition, a change in the Company's strategy to monetize and exit certain Venture
Capital portfolio investments resulted in the write-down of certain investments. These investments, also classified as Level 3
measurements, were valued at $17 million using unobservable inputs, including assumptions a market participant would use to
measure the fair value of the investment. These impairment charges, totaling $169 million, are included in "Restructuring
charges (credits)" in the consolidated statements of income. See Note 3 for additional information on the Company's 2015
restructuring program.
As a result of the Company’s continued actions to optimize its footprint, the Company recognized an impairment charge of
$144 million in the fourth quarter of 2015, related to manufacturing assets and facilities and an equity method investment.
These assets, classified as Level 3 measurements, were written down to zero. The impairment charges were included in "Cost of