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Fair Value Measurements
 3 Months Ended
Mar. 31, 2015
Fair Value Disclosures [Abstract]  
Fair Value Disclosures
Fair Value Measurements
The Fair Value Measurements and Disclosure Topic of the FASB ASC establishes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:
•
Level 1 - quoted prices in active markets for identical assets or liabilities;
•
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly; and
•
Level 3 - unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
The following tables provide the valuation hierarchy classification of assets and liabilities that are carried at fair value and measured on a recurring and nonrecurring basis in our Condensed Consolidated Balance Sheet as of March 31, 2015 and December 31, 2014: 
March 31, 2015 (Dollars in millions)
Total
 
Level 1
 
Level 2
 
Level 3
Recurring fair value measurements:
 
 
 
 
 
 
 
Available-for-sale securities
$
982

 
$
982

 
$
—

 
$
—

Derivative assets
131

 
—

 
131

 
—

Derivative liabilities
(610
)
 
—

 
(610
)
 
—


December 31, 2014 (Dollars in millions)
Total
 
Level 1
 
Level 2
 
Level 3
Recurring fair value measurements:
 
 
 
 
 
 
 
Available-for-sale securities
$
961

 
$
961

 
$
—

 
$
—

Derivative assets
142

 
—

 
142

 
—

Derivative liabilities
(319
)
 
—

 
(319
)
 
—

Nonrecurring fair value measurements:
 
 
 
 
 
 
 
Business dispositions
3

 
—

 
3

 
—


We have recorded net gains of approximately $126 million during the quarter ended March 31, 2015, as a result of a fair value adjustment related to the acquisition of a controlling interest in a UTC Climate, Controls & Security joint venture investment.
Valuation Techniques. Our available-for-sale securities include equity investments that are traded in active markets, either domestically or internationally, and are measured at fair value using closing stock prices from active markets. Our derivative assets and liabilities include foreign exchange contracts and commodity derivatives that are measured at fair value using internal models based on observable market inputs such as forward rates, interest rates, our own credit risk and our counterparties' credit risks. As of March 31, 2015, there were no significant transfers in and out of Level 1 and Level 2.
As of March 31, 2015, there has not been any significant impact to the fair value of our derivative liabilities due to our own credit risk. Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties' credit risks.
The following table provides carrying amounts and fair values of financial instruments that are not carried at fair value in our Condensed Consolidated Balance Sheet at March 31, 2015 and December 31, 2014:
 
March 31, 2015
 
December 31, 2014
(Dollars in millions)
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
Long-term receivables
$
146

 
$
138

 
$
214

 
$
204

Customer financing notes receivable
252

 
250

 
262

 
260

Short-term borrowings
(2,314
)
 
(2,314
)
 
(126
)
 
(126
)
Long-term debt (excluding capitalized leases)
(19,650
)
 
(22,530
)
 
(19,634
)
 
(22,254
)
Long-term liabilities
(289
)
 
(276
)
 
(80
)
 
(74
)

The following table provides the valuation hierarchy classification of assets and liabilities that are not carried at fair value in our Condensed Consolidated Balance Sheet as of March 31, 2015:
(Dollars in millions)
Total
 
Level 1
 
Level 2
 
Level 3
Long-term receivables
$
138

 
$
—

 
$
138

 
$
—

Customer financing notes receivable
250

 
—

 
250

 
—

Short-term borrowings
(2,314
)
 
—

 
(2,180
)
 
(134
)
Long-term debt (excluding capitalized leases)
(22,530
)
 
—

 
(22,138
)
 
(392
)
Long-term liabilities
(276
)
 
—

 
(276
)
 
—


We had commercial aerospace financing and other contractual commitments totaling approximately $10.9 billion and $11.3 billion as of March 31, 2015 and December 31, 2014, respectively, related to commercial aircraft and certain contractual rights to provide product on new aircraft platforms. Risks associated with changes in interest rates on these commitments are mitigated by the fact that interest rates are variable during the commitment term, and are set at the date of funding based on current market conditions, the fair value of the underlying collateral and the credit worthiness of the customers. As a result, the fair value of these financings is expected to equal the amounts funded. The fair value of these commitments is not readily determinable.