XML 38 R23.htm IDEA: XBRL DOCUMENT v3.25.0.1
FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
(In millions)TotalQuoted prices in active markets for identical assets
(Level 1)		Other observable inputs
(Level 2)		Unobservable inputs
(Level 3)
December 31, 2024    
Cash$555 $555 $— $— 
Short-term investments1,525 1,525 — — 
Net derivative contracts(16)— (16)— 
Contingent future payments from acquisition of Green Motion(6)— — (6)
December 31, 2023    
Cash$488 $488 $— $— 
Short-term investments2,121 2,121 — — 
Net derivative contracts11 — 11 — 
Contingent future payments from acquisition of Green Motion(18)— — (18)
Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.
On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $106 million, including $49 million of cash paid at closing and an initial estimate of $57 million for the fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $113 million. As of December 31, 2024, the fair value of the contingent future payments has been reduced to $6 million based primarily on lower revenue in 2023 and 2024 compared to the initial estimates at closing. This reduction is presented in Other income - net on the Consolidated Statements of Income.
Other Fair Value Measurements
Long-term debt and the current portion of long-term debt had a carrying value of $9,152 million and fair value of $8,651 million at December 31, 2024 compared to $9,261 million and $8,924 million, respectively, at December 31, 2023. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.
Short-Term Investments
Eaton invests excess cash generated from operations in short-term marketable investments. Short-term investments are recorded at carrying value, which approximates the fair value due to the short-term maturities of these investments. A summary of short-term investments is as follows:
December 31
(In millions)20242023
Time deposits and certificates of deposit with banks$157 $299 
Money market investments1,368 1,822 
Total short-term investments$1,525 $2,121