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Derivative Financial Instruments and Hedging Activities (Notes)
 9 Months Ended
Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended September 30 were as follows (in millions):
 Third QuarterFirst Nine Months
Cash flow hedges
2020202120202021
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$6 $(161)$(68)$(349)
Commodity contracts (b)
(22)50 (50)78 
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
94 98 190 299 
Fair value changes on hedging instruments(103)(142)1,119 (680)
Fair value changes on hedged debt96 135 (1,095)638 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(1)(2)(1)(6)
Fair value changes on hedging instruments(10)(28)(10)(67)
Fair value changes on hedged debt6 25 6 58 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)(349)123 (37)209 
Cross-currency interest rate swap contracts
210 (194)213 (390)
Interest rate contracts(4)— (90)(25)
Commodity contracts19 25 (12)153 
Total$(58)$(71)$165 $(82)
__________
(a)For the third quarter and first nine months of 2020, a $132 million loss and a $684 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2021, a $225 million gain and a $346 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the third quarter and first nine months of 2020, a $36 million gain and a $48 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the third quarter and first nine months of 2021, a $114 million gain and a $294 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the third quarter and first nine months of 2020, a $242 million loss and a $97 million loss, respectively, were reported in Cost of sales, and a $107 million loss and a $60 million gain, respectively, were reported in Other income/(loss), net. For the third quarter and first nine months of 2021, a $44 million gain and a $122 million gain, respectively, were reported in Cost of sales, and a $79 million gain and an $87 million gain, respectively, were reported in Other income/(loss), net.
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2020September 30, 2021
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$15,860 $47 $383 $11,540 $71 $317 
Commodity contracts703 40 5 833 230 — 
Fair value hedges   
Interest rate contracts26,924 1,331 4 26,007 853 150 
Cross-currency interest rate swap contracts
885 46 — 885 — 29 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts25,956 172 399 24,412 252 281 
Cross-currency interest rate swap contracts
6,849 557 1 6,547 181 39 
Interest rate contracts70,318 663 439 52,018 316 183 
Commodity contracts599 74 4 1,015 102 20 
Total derivative financial instruments, gross (a) (b)
$148,094 $2,930 $1,235 $123,257 $2,005 $1,019 
Current portion
$974 $859 $1,046 $594 
Non-current portion
1,956 376 959 425 
Total derivative financial instruments, gross
$2,930 $1,235 $2,005 $1,019 
__________
(a)At December 31, 2020 and September 30, 2021, we held collateral of $9 million, and we posted collateral of $96 million and $73 million, respectively.
(b)At December 31, 2020 and September 30, 2021, the fair value of assets and liabilities available for counterparty netting was $505 million and $610 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.