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Derivative Financial Instruments and Hedging Activities (Notes)
 3 Months Ended
Mar. 31, 2023
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 March 31 were as follows (in millions):
 First Quarter
Cash flow hedges
20222023
Reclassified from AOCI to Cost of sales
Foreign currency exchange contracts (a)
$(90)$26 
Commodity contracts (b)
58 (9)
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments
76 (140)
Fair value changes on hedging instruments(986)250 
Fair value changes on hedged debt991 (279)
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments
(3)(14)
Fair value changes on hedging instruments(37)22 
Fair value changes on hedged debt41 (19)
Derivatives not designated as hedging instruments
Foreign currency exchange contracts (c)(46)(3)
Cross-currency interest rate swap contracts
(227)85 
Interest rate contracts123 (12)
Commodity contracts109 (11)
Total$9 $(104)
__________
(a)For the first quarter of 2022 and 2023, a $128 million loss and a $63 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax.
(b)For the first quarter of 2022 and 2023, a $284 million gain and an $8 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax.
(c)For the first quarter of 2022 and 2023, a $44 million loss and a $19 million gain, respectively, were reported in Cost of sales, and a $2 million loss and a $22 million loss, 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, 2022March 31, 2023
NotionalFair Value of
Assets		Fair Value of
Liabilities		NotionalFair Value of
Assets		Fair Value of
Liabilities
Cash flow hedges   
Foreign currency exchange contracts
$11,536 $376 $52 $16,998 $316 $102 
Commodity contracts990 16 56 1,012 15 40 
Fair value hedges
Interest rate contracts16,883 — 1,653 19,042 15 1,302 
Cross-currency interest rate swap contracts
885 — 161 1,421 4 135 
Derivatives not designated as hedging instruments
Foreign currency exchange contracts20,851 162 285 19,718 136 164 
Cross-currency interest rate swap contracts
6,635 15 653 6,115 38 528 
Interest rate contracts63,210 931 483 57,312 753 397 
Commodity contracts841 26 35 949 32 39 
Total derivative financial instruments, gross (a) (b)
$121,831 $1,526 $3,378 $122,567 $1,309 $2,707 
Current portion
$1,101 $1,656 $813 $1,462 
Non-current portion
425 1,722 496 1,245 
Total derivative financial instruments, gross
$1,526 $3,378 $1,309 $2,707 
__________
(a)At December 31, 2022 and March 31, 2023, we held collateral of $210 million and $180 million, respectively, and we posted collateral of $201 million and $203 million, respectively.
(b)At December 31, 2022 and March 31, 2023, the fair value of assets and liabilities available for counterparty netting was $451 million and $438 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.