Fair Value Measurements

Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:


•	Level 1: observable inputs such as quoted prices in active markets;


•	Level 2: inputs other than quoted prices in active markets that are either directly or indirectly observable; and


•	Level 3: unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The Company measures the fair value of equity investments (primarily its investment in JD) on a recurring basis and records them in other long-term assets in the accompanying Consolidated Balance Sheets. Measurement details about the Company's two portions of the investment in JD are as follows:


•	The purchased portion of the investment in JD measured using Level 1 inputs, which prior to fiscal 2019 was classified as available-for-sale with changes in fair value recognized through other comprehensive income; and


•	The portion of the investment in JD received in exchange for selling certain assets related to Yihaodian, the Company's former eCommerce operation in China, measured using Level 2 inputs. Fair value is determined primarily using quoted prices in active markets for similar assets. Prior to fiscal 2019, the investment was carried at cost.

Information for the cost basis, carrying value and fair value of the Company's investment in JD is as follows:



(Amounts in millions)	Cost Basis		Carrying Value as of January 31, 2018		Fair Value as of February 1, 2018			Fair Value as of January 31, 2019
Investment in JD measured using Level 1 inputs	$	1,901	$	3,547	$	3,547	⁽¹⁾	$	1,791
Investment in JD measured using Level 2 inputs	1,490		1,490		3,559		⁽²⁾	1,792
Total	$	3,391	$	5,037	$	7,106		$	3,583	⁽³⁾

(1) Fair value was already recognized on the balance sheet. Upon adoption of the new financial instrument standard on February 1, 2018, the excess of fair value over cost was reclassified from accumulated other comprehensive loss to retained earnings.

(2) Upon adoption of the new financial instrument standard on February 1, 2018, the excess of fair value over cost was recognized by increasing the carrying value of the asset and retained earnings.

(3) The decreases in fair value from February 1, 2018 to January 31, 2019 of $3.5 billion was recognized in net income and included in other gains and losses in the Company's Consolidated Statements of Income.

The Company also has derivatives. Derivative fair values are the estimated amounts the Company would receive or pay upon termination of the related derivative agreements as of the reporting dates. The fair values have been measured using the income approach and Level 2 inputs, which include the relevant interest rate and foreign currency forward curves. As of January 31, 2019 and January 31, 2018, the notional amounts and fair values of these derivatives were as follows:



	January 31, 2019					January 31, 2018
(Amounts in millions)	Notional Amount		Fair Value			Notional Amount		Fair Value
Receive fixed-rate, pay variable-rate interest rate swaps designated as fair value hedges	$	4,000	$	(78	)	$	4,000	$	(91	)
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as net investment hedges	2,250		334			2,250		208
Receive fixed-rate, pay fixed-rate cross-currency swaps designated as cash flow hedges	4,173		(272		)	4,523		205
Total	$	10,423	$	(16	)	$	10,773	$	322

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company's assets and liabilities are also subject to nonrecurring fair value measurements. Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

As discussed in Note 13, the Company sold the majority stake in Walmart Brazil during fiscal 2019. The assets of the disposal group totaled $3.3 billion and were comprised of $1.0 billion in current assets, $1.6 billion in property and equipment and property under capital lease and financing obligations, net, and $0.7 billion of other long-term assets. When measured as held for sale, these assets were fully impaired as the carrying value of the disposal group exceeded the fair value, less costs to sell and contributed to a pre-tax net loss of $4.8 billion in the Walmart International segment, which was recorded in other gains and losses in the Company's Consolidated Statement of Income. Other impairment charges to assets measured at fair value on a nonrecurring basis during fiscal 2019 were immaterial.

For the fiscal year ended January 31, 2018, the Company recorded impairment charges related to assets measured at fair value on a non-recurring basis of approximately $1.4 billion primarily related to the following:


•	in the Sam's Club segment as discussed in Note 14, $0.6 billion for restructuring charges for closures of underperforming clubs; the impaired assets consisted primarily of buildings and related store fixtures, and leased assets of its retail operations;


•	in the Walmart International segment as discussed in Note 14, $0.2 billion for restructuring charges for the wind-down of the Brazil first-party eCommerce business; the impaired assets consisted primarily of fixtures and equipment; and


•	immaterial discontinued real estate projects in the Walmart U.S. and Sam's Club segments and decisions to exit certain international properties in the Walmart International segment.

These impairment charges were classified in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The fair value was determined based on comparable market values of similar properties or on a rental income approach, using Level 2 inputs. Impairment charges not related to restructuring or decisions to exit properties for fiscal 2018 were not material.

Other Fair Value Disclosures

The Company records cash and cash equivalents, restricted cash and short-term borrowings at cost. The carrying values of these instruments approximate their fair value due to their short-term maturities.

The Company's long-term debt is also recorded at cost. The fair value is estimated using Level 2 inputs based on the Company's current incremental borrowing rate for similar types of borrowing arrangements. The carrying value and fair value of the Company's long-term debt as of January 31, 2019 and 2018, are as follows:



	January 31, 2019				January 31, 2018
(Amounts in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, including amounts due within one year	$	45,396	$	49,570	$	33,783	$	38,766