Johnson Controls 2012 Annual Report Download - page 76

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76
Amount of Gain (Loss) Recognized in Income on Derivative
Derivatives Not Designated as
Location of Gain (Loss)
Year Ended September 30,
Hedging Instruments under ASC 815
Recognized in Income on Derivative
2012
2011
Foreign currency exchange derivatives
Cost of sales
$
23
$
5
Foreign currency exchange derivatives
Net financing charges
(19)
3
Foreign currency exchange derivatives
Provision for income taxes
1
-
Equity swap
Selling, general and administrative
6
(23)
Total
$
11
$
(15)
The amount of gains (losses) recognized in cumulative translation adjustment (CTA) within AOCI on the effective
portion of outstanding net investment hedges was $1 million and $(12) million at September 30, 2012 and 2011,
respectively. For the years ended September 30, 2012 and 2011, no gains or losses were reclassified from CTA into
income for the Company’s outstanding net investment hedges, and no gains or losses were recognized in income for
the ineffective portion of cash flow hedges.
10. FAIR VALUE MEASUREMENTS
ASC 820, ―Fair Value Measurements and Disclosures,‖ defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 also establishes a three-level fair value hierarchy that prioritizes information used in developing
assumptions when pricing an asset or liability as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly;
and
Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to
develop its own assumptions.
ASC 820 requires the use of observable market data, when available, in making fair value measurements. When
inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value
measurement is categorized is based on the lowest level input that is significant to the fair value measurement.