Fair value disclosures (Tables)

12 Months Ended

Dec. 31, 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 Statement 3 as of December 31, 2017 and 2016 are summarized below:



	December 31, 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	—		42		—		42

Corporate bonds
Corporate bonds	—		584		—		584
Asset-backed securities	—		67		—		67

Mortgage-backed debt securities
U.S. governmental agency	—		261		—		261
Residential	—		8		—		8
Commercial	—		17		—		17

Equity securities
Large capitalization value	284		—		—		284
Smaller company growth	56		—		—		56
Total available-for-sale securities	350		979		—		1,329

REIT	—		—		110		110
Total Assets	$	350	$	979	$	110	$	1,439

Liabilities
Derivative financial instruments, net	$	—	$	19	$	—	$	19
Total Liabilities	$	—	$	19	$	—	$	19



	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 REIT investments

A roll-forward of our REIT investment for the year ended December 31, 2017 is as follows:



(Millions of dollars)
Balance at December 31, 2016	$	79
Purchases of securities	27
Sale of securities	—
Gains (losses) included in Accumulated other comprehensive income (loss)	4
Balance at December 31, 2017	$	110

Fair values of financial instruments

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



TABLE III—Fair Values of Financial Instruments
	2017				2016
(Millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Levels	Reference
Assets at December 31,
Cash and short-term investments	$	8,261	$	8,261	$	7,168	$	7,168	1	Statement 3
Restricted cash and short-term investments	194		194		31		31		1	Statement 3
Investments in debt and equity securities	1,439		1,439		1,367		1,367		1, 2 & 3	Notes 11 & 19
Finance receivables–net (excluding finance leases ¹)	15,452		15,438		16,172		16,056		3	Notes 6 & 19
Wholesale inventory receivables–net (excluding finance leases ¹)	1,153		1,123		1,500		1,464		3	Notes 6 & 19
Interest rate swaps–net	1		1		3		3		2	Notes 3 & 19
Commodity contracts–net	21		21		10		10		2	Notes 3 & 19

Liabilities at December 31,
Short-term borrowings	4,837		4,837		7,303		7,303		1	Note 13
Long-term debt (including amounts due within one year):
Machinery, Energy & Transportation	7,935		9,863		8,943		10,348		2	Note 14
Financial Products	22,106		22,230		20,537		20,724		2	Note 14
Foreign currency contracts–net	41		41		85		85		2	Notes 3 & 19
Guarantees	8		8		8		8		3	Note 21


¹	Total excluded items have a net carrying value at December 31, 2017 and 2016 of $7,063 million and $6,111 million, respectively.