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Financial Instruments
 6 Months Ended
Mar. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Financial Instruments Financial Instruments
Fair values of financial instruments are summarized as follows (in millions):
March 31, 2022September 30, 2021
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Cash and cash equivalents$115 $115 $101 $101 
Short-term debt114 114 19 19 
Long-term debt1,025 1,083 1,008 1,082 
Foreign exchange forward contracts (other assets)1 1 1 1 

The following table reflects the offsetting of derivative assets (in millions):
March 31, 2022September 30, 2021

Gross
Amounts Recognized		Gross Amounts
Offset		Net Amounts
Reported		Gross
Amounts Recognized		Gross Amounts
Offset		Net Amounts
Reported
Derivative Assets
Foreign exchange forward contracts1 — 1 1 — 1 

Fair Value
Fair value of financial instruments by the valuation hierarchy at March 31, 2022 is as follows (in millions):
Level 1Level 2Level 3
Cash and cash equivalents$115 $— $— 
Short-term debt— 95 19 
Long-term debt— 945 138 
Foreign exchange forward contracts (other assets)— 1 — 
Fair value of financial instruments by the valuation hierarchy at September 30, 2021 is as follows (in millions):
Level 1Level 2Level 3
Cash and cash equivalents$101 $— $— 
Short-term debt— — 19 
Long-term debt— 937 145 
Foreign exchange forward contracts (other assets)— 1 — 

No transfers of assets between any of the Levels occurred during the three and six months ended March 31, 2022 and 2021.

Cash and cash equivalents — All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. The carrying value approximates fair value because of the short maturity of these instruments.

Short- and long-term debt — Fair values are based on transaction prices at public exchange for publicly traded debt. For debt instruments that are not publicly traded, fair values are based on interest rates that would be currently available to the company for issuance of similar types of debt instruments with similar terms and remaining maturities.

Foreign exchange forward contracts — The company uses foreign exchange forward purchase and sale contracts with varying terms that extend through fiscal year 2025 to hedge its exposure to changes in foreign currency exchange rates. As of March 31, 2022 and September 30, 2021, the notional amount of the company's foreign exchange contracts outstanding under its foreign currency cash flow hedging program was $68 million and $107 million, respectively. The fair value of foreign exchange forward contracts is based on a model which incorporates observable inputs including quoted spot rates, forward exchange rates and discounted future expected cash flows utilizing market interest rates with similar quality and maturity characteristics. For derivative instruments that are designated and qualify as cash flow hedges, changes in the fair value of the contracts is recorded in Accumulated Other Comprehensive Loss in the Condensed Consolidated Statement of Equity and is recognized in operating income when the underlying forecasted transaction impacts earnings.

Foreign currency option contracts — The company uses option contracts to mitigate foreign exchange exposure on expected future foreign currency-denominated purchases. As of March 31, 2022 and September 30, 2021, the notional amount of the company's foreign exchange contracts outstanding was $13 million and $49 million, respectively. The company did not elect hedge accounting for these derivatives. Changes in fair value associated with these contracts are recorded in cost of sales in the Condensed Consolidated Statement of Operations.

The company uses option contracts to mitigate the risk of volatility in the translation of foreign currency earnings to U.S. dollars. As of March 31, 2022 and September 30, 2021, the company had no option contracts outstanding. These option contracts did not qualify for a hedge accounting election. Changes in fair value associated with these contracts are recorded in the Condensed Consolidated Statement of Operations in other income, net.

The fair value of foreign currency option contracts is based on third-party proprietary models, which incorporate inputs at varying unobservable weights of quoted spot rates, market volatility, forward rates and time utilizing market instruments with similar quality and maturity characteristics.