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Fair Value Measurements and Disclosures (Tables)

6 Months Ended

Jun. 30, 2020

Assets Measured on Recurring Basis or Disclosed at Fair Value

The following table is a summary of our financial assets measured on a recurring basis or disclosed at fair value and the level within the fair value hierarchy in which the measurement falls. The Company classifies its cash equivalents, short-term investments, long-term time deposits and investment in equity securities within Level 1 or Level 2 in the fair value hierarchy because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value, respectively. No transfers among the levels within the fair value hierarchy occurred during the quarters ended June 30, 2020 and 2019.

			Fair Value Measurement or Disclosure at June 30, 2020
	Balance at June 30, 2020		Level 1		Level 2		Level 3
Cash equivalents:
Time deposits	$	230			$	230
Money market funds		52		52
Fixed rate debt securities^(a)		28				28
Total cash equivalents		310		52		258		—
Short-term investments:
Time deposits		1,034				1,034
Total short-term investments		1,034		—		1,034		—
Other assets:
Investment in equity securities		93		93
Long-term time deposits		57				57
Total	$	1,494	$	145	$	1,349	$	—

(a)	Classified as held-to-maturity investments and measured at amortized cost.

			Fair Value Measurement or Disclosure at December 31, 2019
	Balance at December 31, 2019		Level 1		Level 2		Level 3
Cash equivalents:
Time deposits	$	407			$	407
Money market funds		331		331
Total cash equivalents		738		331		407		—
Short-term investments:
Time deposits		611				611
Total short-term investments		611		—		611		—
Other assets:
Investment in equity securities		110		110
Total	$	1,459	$	441	$	1,018	$	—

Schedule of Amounts Recognized From Non-recurring Fair Value Measurements

The following table presents amounts recognized from all non-recurring fair value measurements based on unobservable inputs (Level 3) during the quarters ended June 30, 2020 and 2019. These amounts exclude fair value measurements made for restaurants that were subsequently closed or refranchised prior to those respective period-end dates.

	Quarter Ended				Year to Date Ended
	6/30/2020		6/30/2019		6/30/2020		6/30/2019		Account Classification
Restaurant-level impairment^(a)	$	21	$	7	$	30	$	19	Closure and impairment expenses, net
ROU impairment prior to the adoption of ASC 842^(b)		—		—		—		82	Retained Earnings
Total	$	21	$	7	$	30	$	101

(a)

Restaurant-level impairment charges are recorded in Closure and impairment expenses, net and resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants that were being operated at the time of impairment and had not been offered for refranchising. We performed an additional impairment evaluation in the first quarter of 2020, considering the adverse effects of the COVID-19 pandemic as an impairment indicator. A trend of continuing operating losses for certain restaurants due to the COVID-19 pandemic resulted in higher impairment during the second quarter of 2020. We also performed an additional impairment evaluation upon adoption of ASC 842 in the first quarter of 2019. The remaining net book value of assets at fair value as of each relevant measurement date, after considering the impairment charge recorded during the quarters and years to date ended June 30, 2020 and 2019 was $49 million, $76 million, $14 million and $20 million, respectively.

(b)

ROU impairment prior to the adoption of ASC 842 represents an impairment charge on operating lease ROU assets arising from existing operating leases as of January 1, 2019. After netting with the related impact on deferred taxes of $19 million and the impact on noncontrolling interests of $3 million, we recorded a cumulative adjustment of $60 million to retained earnings in accordance with the transition guidance for the new lease standard. For those restaurants under operating leases with full impairment on their long-lived assets (primarily property, plant and equipment) before January 1, 2019, an additional impairment charge would have been recorded before January 1, 2019 had the operating lease ROU assets been recognized at the time of impairment.