Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2017

Assets and liabilities measured on a recurring basis at fair value

Assets and liabilities measured on a recurring basis at fair value, primarily related to Financial Products, included in our Consolidated Statement of Financial Position as of September 30, 2017 and December 31, 2016 are summarized below:



	September 30, 2017
(Millions of dollars)	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	10	$	—	$	—	$	10
Other U.S. and non-U.S. government bonds	—		48		—		48
Corporate bonds
Corporate bonds	—		532		—		532
Asset-backed securities	—		76		—		76
Mortgage-backed debt securities
U.S. governmental agency	—		243		—		243
Residential	—		8		—		8
Commercial	—		17		—		17
Equity securities
Large capitalization value	349		—		—		349
Smaller company growth	65		—		—		65
Total available-for-sale securities	424		924		—		1,348
REIT	—		—		109		109
Derivative financial instruments, net	—		28		—		28
Total Assets	$	424	$	952	$	109	$	1,485



	December 31, 2016
(Millions of dollars)	Level 1		Level 2		Level 3		Total Assets / Liabilities, at Fair Value
Assets
Available-for-sale securities
Government debt
U.S. treasury bonds	$	9	$	—	$	—	$	9
Other U.S. and non-U.S. government bonds	—		60		—		60
Corporate bonds
Corporate bonds	—		492		—		492
Asset-backed securities	—		90		—		90
Mortgage-backed debt securities
U.S. governmental agency	—		223		—		223
Residential	—		10		—		10
Commercial	—		36		—		36
Equity securities
Large capitalization value	312		—		—		312
Smaller company growth	56		—		—		56
Total available-for-sale securities	377		911		—		1,288
REIT	—		—		79		79
Total Assets	$	377	$	911	$	79	$	1,367
Liabilities
Derivative financial instruments, net	$	—	$	72	$	—	$	72
Total Liabilities	$	—	$	72	$	—	$	72

Roll-forward of assets measured at fair value using Level 3 inputs

The fair value of our REIT investment is measured based on NAV, which is considered a Level 3 input. A roll-forward for the nine months ended September 30, 2017 of our REIT investment is as follows:



(Millions of dollars)	REIT
Balance at December 31, 2016	$	79
Purchases of securities	27
Sale of securities	—
Gains (losses) included in Accumulated other comprehensive income (loss)	3
Balance at September 30, 2017	$	109

Fair values of financial instruments

Please refer to the table below for the fair values of our financial instruments.



	Fair Value of Financial Instruments
	September 30, 2017				December 31, 2016
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets
Cash and short-term investments	$	9,591	$	9,591	$	7,168	$	7,168	1
Restricted cash and short-term investments	$	202	$	202	$	31	$	31	1
Investments in debt and equity securities	$	1,457	$	1,457	$	1,367	$	1,367	1, 2 & 3	Note 8
Finance receivables – net (excluding finance leases ¹)	$	15,583	$	15,604	$	16,172	$	16,056	3	Note 16
Wholesale inventory receivables – net (excluding finance leases ¹)	$	1,393	$	1,362	$	1,500	$	1,464	3	Note 16
Foreign currency contracts – net	$	14	$	14	$	—	$	—	2	Note 4
Interest rate contracts – net	$	2	$	2	$	3	$	3	2	Note 4
Commodity contracts – net	$	12	$	12	$	10	$	10	2	Note 4

Liabilities
Short-term borrowings	$	5,470	$	5,470	$	7,303	$	7,303	1
Long-term debt (including amounts due within one year)
Machinery, Energy & Transportation	$	8,825	$	10,708	$	8,943	$	10,348	2
Financial Products	$	21,629	$	21,854	$	20,537	$	20,724	2
Foreign currency contracts – net	$	—	$	—	$	85	$	85	2	Note 4
Guarantees	$	8	$	8	$	8	$	8	3	Note 10


¹	Total excluded items have a net carrying value at September 30, 2017 and December 31, 2016 of $6,800 million and $6,111 million, respectively.