Fair Value


(a)	Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):



	JULY 28, 2018						JULY 29, 2017
	FAIR VALUE MEASUREMENTS						FAIR VALUE MEASUREMENTS
	Level 1		Level 2		Total Balance		Level 1		Level 2		Total Balance
Assets:
Cash equivalents:
Money market funds	$	6,890	$	—	$	6,890	$	9,567	$	—	$	9,567
U.S. government securities	—		—		—		—		139		139
Commercial paper	—		—		—		—		160		160
Certificates of deposit	—		—		—		—		25		25
Available-for-sale investments:
U.S. government securities	—		7,275		7,275		—		19,823		19,823
U.S. government agency securities	—		727		727		—		2,052		2,052
Non-U.S. government and agency securities	—		208		208		—		388		388
Corporate debt securities	—		27,364		27,364		—		31,735		31,735
U.S. agency mortgage-backed securities	—		1,435		1,435		—		2,023		2,023
Commercial paper	—		—		—		—		996		996
Certificates of deposit	—		—		—		—		60		60
Publicly traded equity securities	605		—		605		1,707		—		1,707
Derivative assets	—		2		2		—		149		149
Total	$	7,495	$	37,011	$	44,506	$	11,274	$	57,550	$	68,824
Liabilities:
Derivative liabilities	$	—	$	74	$	74	$	—	$	4	$	4
Total	$	—	$	74	$	74	$	—	$	4	$	4

We classify our cash equivalents and available-for-sale investments within Level 1 or Level 2 in the fair value hierarchy because we use quoted prices in active markets or alternative pricing sources and models using market observable inputs to determine their fair value. Our derivative instruments are classified as Level 2, as they are not actively traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and Level 2 fair value measurements during the periods presented.


(b)	Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents gains and losses on assets that were measured at fair value on a nonrecurring basis(in millions):



	TOTAL GAINS (LOSSES) FOR THE YEARS ENDED
	July 28, 2018			July 29, 2017			July 30, 2016
Investments in privately held companies (impaired)	$	(56	)	$	(175	)	$	(57	)
Purchased intangible assets (impaired)	(1		)	(47		)	(74		)
Property held for sale - land and buildings	20			(30		)	—
Gains (losses) on assets no longer held at end of fiscal year	(6		)	(2		)	(10		)
Total gains (losses) for nonrecurring measurements	$	(43	)	$	(254	)	$	(141	)

These assets were measured at fair value due to events or circumstances we identified as having significant impact on their fair value during the respective periods. To arrive at the valuation of these assets, we consider any significant changes in the financial metrics and economic variables and also use third-party valuation reports to assist in the valuation as necessary.

The fair value measurement of the impaired investments was classified as Level 3 because significant unobservable inputs were used in the valuation due to the absence of quoted market prices and inherent lack of liquidity. Significant unobservable inputs, which included financial metrics of comparable private and public companies, financial condition and near-term prospects of the investees, recent financing activities of the investees, and the investees’ capital structure as well as other economic variables, reflected the assumptions market participants would use in pricing these assets. The impairment charges, representing the difference between the net book value and the fair value as a result of the evaluation, were recorded to other income (loss), net. The remaining carrying value of the investments that were impaired was $57 million and $81 million as of July 28, 2018 and July 29, 2017, respectively.

The fair value for purchased intangibles assets measured at fair value on a nonrecurring basis was categorized as Level 3 due to the use of significant unobservable inputs in the valuation. Significant unobservable inputs that were used included expected revenues and net income related to the assets and the expected life of the assets. The difference between the estimated fair value and the carrying value of the assets was recorded as an impairment charge, which was included in product cost of sales and operating expenses as applicable. See Note 4. The remaining carrying value of the specific purchased intangible assets that were impaired was zero and $63 million as of July 28, 2018 and July 29, 2017, respectively.

The fair value of property held for sale was measured with the assistance of third-party valuation models, which used discounted cash flow techniques as part of their analysis. The fair value measurement was categorized as Level 3, as significant unobservable inputs were used in the valuation report. The impairment charges as a result of the valuations, which represented the difference between the fair value less cost to sell and the carrying amount of the assets held for sale, was included in restructuring and other charges. The remaining carrying value of the property held for sale that was impaired was zero and $5 million as of July 28, 2018 and July 29, 2017, respectively.


(c)	Other Fair Value Disclosures

The carrying value of our investments in privately held companies that were accounted for under the cost method was $978 million and $859 million as of July 28, 2018 and July 29, 2017, respectively. It was not practicable to estimate the fair value of this portfolio.

The fair value of our short-term loan receivables and financed service contracts approximates their carrying value due to their short duration. The aggregate carrying value of our long-term loan receivables and financed service contracts as of July 28, 2018 and July 29, 2017 was $3.6 billion and $3.4 billion, respectively. The estimated fair value of our long-term loan receivables and financed service contracts approximates their carrying value. We use significant unobservable inputs in determining discounted cash flows to estimate the fair value of our long-term loan receivables and financed service contracts, and therefore they are categorized as Level 3.

As of July 28, 2018 and July 29, 2017, the estimated fair value of our short-term debt approximates its carrying value due to the short maturities. As of July 28, 2018, the fair value of our senior notes and other long-term debt was $26.4 billion, with a carrying amount of $25.6 billion. This compares to a fair value of $32.1 billion and a carrying amount of $30.5 billion as of July 29, 2017. The fair value of the senior notes and other long-term debt was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy.