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Derivative Financial Instruments and Hedging Activities (Notes)
 6 Months Ended
Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended June 30 were as follows (in millions):
 Second QuarterFirst Half
Cash flow hedges
2020202120202021
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$(4)$(173)$(74)$(188)
Commodity contracts (b)
(14)20 (28)28 
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
68 100 96 201 
Fair value changes on hedging instruments112 103 1,222 (538)
Fair value changes on hedged debt(98)(87)(1,191)503 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
— (1)— (4)
Fair value changes on hedging instruments— 11 — (39)
Fair value changes on hedged debt— (11)— 33 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)(274)(147)312 86 
Cross-currency interest rate swap contracts
154 49 3 (196)
Interest rate contracts(12)6 (86)(25)
Commodity contracts12 73 (31)128 
Total$(56)$(57)$223 $(11)
__________
(a)For the second quarter and first half of 2020, an $81 million loss and an $816 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2021, a $110 million loss and a $571 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the second quarter and first half of 2020, a $17 million gain and an $84 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax. For the second quarter and first half of 2021, a $100 million gain and a $180 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the second quarter and first half of 2020, a $231 million loss and a $145 million gain, respectively, were reported in Cost of sales, and a $43 million loss and a $167 million gain, respectively, were reported in Other income/(loss), net. For the second quarter and first half of 2021, a $103 million loss and a $78 million gain, respectively, were reported in Cost of sales, and a $44 million loss and an $8 million gain, respectively, were reported in Other income/(loss), net.
NOTE 15. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2020June 30, 2021
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$15,860 $47 $383 $12,738 $15 $618 
Commodity contracts703 40 5 790 172 — 
Fair value hedges   
Interest rate contracts26,924 1,331 4 26,296 998 152 
Cross-currency interest rate swap contracts
885 46 — 885 20 — 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts25,956 172 399 23,258 185 266 
Cross-currency interest rate swap contracts
6,849 557 1 6,565 317 17 
Interest rate contracts70,318 663 439 56,754 381 249 
Commodity contracts599 74 4 827 112 7 
Total derivative financial instruments, gross (a) (b)
$148,094 $2,930 $1,235 $128,113 $2,200 $1,309 
Current portion
$974 $859 $977 $767 
Non-current portion
1,956 376 1,223 542 
Total derivative financial instruments, gross
$2,930 $1,235 $2,200 $1,309 
__________
(a)At December 31, 2020 and June 30, 2021, we held collateral of $9 million and $5 million, respectively, and we posted collateral of $96 million and $64 million, respectively.
(b)At December 31, 2020 and June 30, 2021, the fair value of assets and liabilities available for counterparty netting was $505 million and $573 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.