Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2022

Derivative Financial Instruments

Amounts related to cumulative basis adjustments for fair value hedges

($ in millions)
At December 31:	2022		2021
Short-term debt
Carrying amount of the hedged item	$	(199)	$	(227)
Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)		1		(2)
Long-term debt
Carrying amount of the hedged item		(6,216)		(508)
Cumulative hedging adjustments included in the carrying amount—assets/(liabilities)*		72		(309)

* Includes ($250) million and ($302) million of hedging adjustments on discontinued hedging relationships at December 31, 2022 and 2021, 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:	2022		2021		2020		2022		2021		2020
Cost of services	$	21,062	$	19,147	$	17,689	$	24	$	43	$	23
Cost of sales		6,374		6,184		6,048		99		(16)		2
Cost of financing		406		534		577		2		1		12
SG&A expense		18,609		18,745		20,561		(211)		176		141
Other (income) and expense		5,803		873		802		(225)		(205)		101
Interest expense		1,216		1,155		1,288		6		3		35

($ 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	2022		2021		2020		2022		2021		2020
Derivative instruments in fair value hedges (1)
Interest rate contracts	Cost of financing	$	(73)	$	(1)	$	20	$	85	$	18	$	4
	Interest expense		(257)		(2)		58		299		53		11
Derivative instruments not designated as hedging instruments
Foreign exchange contracts	Other (income) and expense		(492)		(48)		1		N/A		N/A		N/A
Equity contracts	SG&A expense		(249)		201		142		N/A		N/A		N/A
	Other (income) and expense		(83)		—		—		N/A		N/A		N/A
Total		$	(1,153)	$	150	$	220	$	384	$	71	$	14

($ 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:	2022		2021		2020		Line Item	2022		2021		2020		2022		2021		2020
Derivative instruments in cash flow hedges
Interest rate contracts	$	—	$	—	$	—	Cost of financing	$	(4)	$	(4)	$	(5)	$	—	$	—	$	—
							Interest expense		(14)		(13)		(13)		—		—		—
Foreign exchange contracts		241		344		(349)	Cost of services		24		43		23		—		—		—
							Cost of sales		99		(16)		2		—		—		—
							Cost of financing		(21)		(18)		(23)		—		—		—
							SG&A expense		38		(24)		0		—		—		—
							Other (income) and expense		349		(157)		101		—		—		—
							Interest expense		(72)		(52)		(65)		—		—		—
Instruments in net investment hedges (4)
Foreign exchange contracts		1,613		1,644		(2,127)	Cost of financing		—		—		—		14		6		16
							Interest expense		—		—		—		50		17		45
Total	$	1,854	$	1,989	$	(2,477)		$	400	$	(243)	$	21	$	64	$	23	$	60

⁽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