Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

Derivative Financial Instruments

Amounts related to cumulative basis adjustments for fair value hedges

($ in millions)
At December 31:	2020		2019
Short-term debt:
Carrying amount of the hedged item	$	(1,302)	$	—
Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)		(2)		—
Long-term debt:
Carrying amount of the hedged item		(2,097)		(3,411)
Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)*		(424)		(440)

* Includes ($353) million and ($404) million of hedging adjustments on discontinued hedging relationships at December 31, 2020 and 2019, respectively.

Effect of derivative instruments in the consolidated income statement

($ in millions)
							Gains/(Losses) of
	Total						Total Hedge Activity
For the year ended December 31:	2020		2019			2018	2020		2019		2018
Cost of services	$	30,404	$	32,491	$	33,687	$	23	$	68	$	30
Cost of sales		6,934		7,263		7,835		2		51		8
Cost of financing		708		904		1,132		12		(42)		(6)
SG&A expense		23,082		20,604		19,366		141		267		(116)
Other (income) and expense		861		(968)		1,152		101		(15)		(434)
Interest expense		1,288		1,344		723		35		(93)		(6)

($ in millions)
	Gain/(Loss) Recognized in Consolidated Income Statement
	Consolidated	Recognized on						Attributable to Risk
	Income Statement	Derivatives						Being Hedged (2)
For the year ended December 31:	Line Item	2020		2019		2018		2020		2019		2018
Derivative instruments in fair value hedges (1)
Interest rate contracts	Cost of financing	$	20	$	44	$	(61)	$	4	$	(32)	$	97
	Interest expense		58		98		(58)		11		(71)		92
Derivative instruments not designated as hedging instruments
Foreign exchange contracts	Other (income) and expense		1		(53)		(93)		N/A		N/A		N/A
Equity contracts	SG&A expense		142		214		(116)		N/A		N/A		N/A
Total		$	220	$	302	$	(327)	$	14	$	(103)	$	189

($ in millions)
	Gain/(Loss) Recognized in Consolidated Income Statement and Other Comprehensive Income
							Consolidated	Reclassified						Amounts Excluded from
For the year ended	Recognized in OCI						Income Statement	from AOCI						Effectiveness Testing (3)
December 31:	2020		2019		2018		Line Item	2020		2019		2018		2020		2019		2018
Derivative instruments in cash flow hedges
Interest rate contracts	$	—	$	(168)	$	(35)	Cost of financing	$	(5)	$	(3)	$	—	$	—	$	—	$	—
							Interest expense		(13)		(8)		—		—		—		—
Foreign exchange contracts		(349)		(521)		(101)	Cost of services		23		68		30		—		—		—
							Cost of sales		2		51		8		—		—		—
							Cost of financing		(23)		(86)		(75)		—		—		—
							SG&A expense		0		53		0		—		—		—
							Other (income) and expense		101		39		(341)		—		—		—
							Interest expense		(65)		(190)		(71)		—		—		—
Instruments in net investment hedges (4)
Foreign exchange contracts		(2,127)		(95)		686	Cost of financing		—		—		—		16		35		33
							Interest expense		—		—		—		45		77		31
Total	$	(2,477)	$	(784)	$	549		$	21	$	(75)	$	(449)	$	60	$	112	$	64

(1) The amount includes changes in clean fair values of the derivative instruments in fair value hedging relationships and the periodic accrual for coupon payments required under these derivative contracts.

(2) The amount includes basis adjustments to the carrying value of the hedged item recorded during the period and amortization of basis adjustments recorded on de-designated hedging relationships during the period.

(3) The company’s policy is to recognize all fair value changes in amounts excluded from effectiveness testing in net income each period.

(4) Instruments in net investment hedges include derivative and non-derivative instruments with the amounts recognized in OCI providing an offset to the translation of foreign subsidiaries.

N/A–Not applicable