FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. Various valuation approaches can be used to determine fair value, each requiring different valuation inputs. The following hierarchy classifies the inputs used to determine fair value into three levels:


•	Level 1 – quoted prices in active markets for identical assets or liabilities;


•	Level 2 – inputs, other than quoted prices, observable by a marketplace participant either directly or indirectly; and


•	Level 3 – unobservable inputs significant to the fair value measurement.

We did not have any significant non-financial assets or liabilities measured at fair value on December 31, 2014 or 2013, except for the assets of our axle business that are classified as held for sale on December 31, 2014 and were measured at fair value using Level 3 inputs. See Note A for further discussion.

Our financial instruments include cash and equivalents, marketable securities and other investments; accounts receivable and accounts payable; short- and long-term debt; and derivative financial instruments. The carrying values of cash and equivalents, accounts receivable and payable and short-term debt on the Consolidated Balance Sheets approximate their fair value. The following table presents the fair values of our other financial assets and liabilities on December 31, 2014 and 2013, and the basis for determining their fair values:



	Carrying Value			Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2) (a)
Financial assets (liabilities) (b)	December 31, 2014
Held-to-maturity marketable securities	$	500		$	500		$	10	$	490
Available-for-sale securities	188			188			123		65
Derivatives	(276		)	(276		)	—		(276		)
Long-term debt, including current portion	(3,911		)	(3,911		)	—		(3,911		)

	December 31, 2013
Available-for-sale securities	$	183		$	183		$	134	$	49
Derivatives	10			10			—		10
Long-term debt, including current portion	(3,909		)	(3,758		)	—		(3,758		)

(a)Determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields and quoted prices for similar assets and liabilities.

(b)We had no Level 3 financial instruments on December 31, 2014 or 2013.