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Derivative Financial Instruments and Hedging Activities (Notes)
 6 Months Ended
Jun. 30, 2022
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 June 30 were as follows (in millions):
 Second QuarterFirst Half
Cash flow hedges
2021202220212022
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$(173)$(90)$(188)$(180)
Commodity contracts (b)
20 84 28 142 
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
100 25 201 101 
Fair value changes on hedging instruments103 (336)(538)(1,322)
Fair value changes on hedged debt(87)385 503 1,376 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(1)(6)(4)(9)
Fair value changes on hedging instruments11 (61)(39)(98)
Fair value changes on hedged debt(11)65 33 106 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)(147)127 86 81 
Cross-currency interest rate swap contracts
49 (443)(196)(670)
Interest rate contracts6 89 (25)212 
Commodity contracts73 (140)128 (31)
Total$(57)$(301)$(11)$(292)
__________
(a)For the second quarter and first half of 2021, a $110 million loss and a $571 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2022, a $234 million gain and a $106 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the second quarter and first half of 2021, a $100 million gain and a $180 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2022, a $360 million loss and a $76 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the second quarter and first half of 2021, a $103 million loss and a $78 million gain, respectively, were reported in Cost of sales, and a $44 million loss and an $8 million gain, respectively, were reported in Other income/(loss), net. For the second quarter and first half of 2022, a $100 million gain and a $56 million gain, respectively, were reported in Cost of sales, and a $27 million gain and a $25 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, 2021June 30, 2022
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$11,534 $74 $346 $9,153 $92 $97 
Commodity contracts931 182 5 1,028 37 71 
Fair value hedges   
Interest rate contracts23,893 544 274 19,711 — 1,100 
Cross-currency interest rate swap contracts
885 — 49 884 — 135 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts28,463 281 198 21,521 199 196 
Cross-currency interest rate swap contracts
6,533 117 61 6,633 31 690 
Interest rate contracts50,060 338 126 44,788 651 259 
Commodity contracts997 54 11 871 33 96 
Total derivative financial instruments, gross (a) (b)
$123,296 $1,590 $1,070 $104,589 $1,043 $2,644 
Current portion
$924 $535 $661 $1,104 
Non-current portion
666 535 382 1,540 
Total derivative financial instruments, gross
$1,590 $1,070 $1,043 $2,644 
__________
(a)At December 31, 2021 and June 30, 2022, we held collateral of $26 million and $147 million, respectively, and we posted collateral of $71 million and $115 million, respectively.
(b)At December 31, 2021 and June 30, 2022, the fair value of assets and liabilities available for counterparty netting was $719 million and $388 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.