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Financial Instruments (Tables)
 12 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Assets and liabilities measured at fair value on a recurring basis
Our assets and liabilities measured at fair value on a recurring basis consists of derivative instruments and investment securities.
 
2019
2018
 
Level 1
Level 2
Level 3
Net Balance
Level 1
Level 2
Level 3
Net Balance
Assets
 

 

 

 
 
 
 
 
Derivatives
$
—

$
58

$
—

$
58

$
—

$
74

$
—

$
74

   Investment securities
24

—

259

283

39

—

288

327

Total assets
24

58

259

341

39

74

288

401

 
 
 
 
 
 
 
 
 
Liabilities
 

 

 

 
 
 
 
 
Derivatives
—

(27
)
—

(27
)
—

(82
)
—

(82
)
Total liabilities
$
—

$
(27
)
$
—

$
(27
)
$
—

$
(82
)
$
—

$
(82
)
Changes in the fair value of assets
The following table provides a reconciliation of recurring Level 3 fair value measurements for investment securities:
 
2019
2018
Balance at beginning of year
$
288

$
304

Purchases
7

75

Proceeds at maturity
(38
)
(90
)
Unrealized gains (losses) recognized in accumulated other comprehensive income (loss)
2

(1
)
Balance at end of year
$
259

$
288
Schedule of investment securities classified as available for sale
 
2019
2018
 
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Investment securities
 

 

 

 
 
 
 
 
Non-U.S. debt securities (1)
$
257

$
2

$
—

$
259

$
288

$
—

$
—

$
288

   Equity securities (2)
24

—

—

24

39

—

—

39

Total
$
281

$
2

$
—

$
283

$
327

$
—

$
—

$
327


(1) 
All of our investment securities are classified as available for sale instruments. Non-U.S. debt securities mature within three years.
(2) 
Gains (losses) recorded to earnings related to these securities were $2 million, $(25) million and $30 million for the years ended December 31, 2019, 2018, and 2017, respectively.
Schedule of derivatives The table below summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
 
2019
2018
 
Assets
(Liabilities)
Assets
(Liabilities)
Derivatives accounted for as hedges
 
 
 
 
Currency exchange contracts
$
11

$
—

$
—

$
(7
)
 
 
 
 
 
Derivatives not accounted for as hedges
 
 
 
 
Currency exchange contracts and other
47

(27
)
74

(75
)
Total derivatives
$
58

$
(27
)
$
74

$
(82
)
Schedule of hedging instrument, currency exchange contract The table below summarizes this activity by hedging instrument.
 
Gain (Loss) Recognized in AOCI
Gain (Loss) Reclassified from AOCI to Earnings
 
2019
2018
2017
2019
2018
2017
Currency exchange contracts
$
13

$
(6
)
$
8

$
(1
)
$
(1
)
$
(7
)
Schedule of gains (losses) from derivatives not designated as hedges
The following table summarizes the gains (losses) from derivatives not designated as hedges on the consolidated and combined statements of income (loss):
Derivatives not designated as hedging instruments
Consolidated and combined statement of income caption
2019
2018
2017
Currency exchange contracts (1)
Cost of goods sold
$
(6
)
$
(12
)
$
76

Currency exchange contracts
Selling, general and administrative
(22
)
9

45

Commodity derivatives
Cost of goods sold
2

(1
)
1

Other derivatives
Other non operating income (loss), net
2

—

—

Total (2)
 
$
(24
)
$
(4
)
$
122

(1) 
Excludes losses on embedded derivatives of $7 million, $3 million and $76 million at December 31, 2019, 2018 and 2017, respectively, as embedded derivatives are not considered to be hedging instruments in our economic hedges.
(2) 
The effect on earnings of derivatives not designated as hedges is substantially offset by change in fair value of the economically hedged items in the current and future periods.