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RISK MANAGEMENT ACTIVITIES AND FAIR VALUE MEASUREMENTS
 6 Months Ended
Dec. 31, 2022
Risk Management Activities and Fair Value Measurements [Abstract]  
Risk Management And Fair Value [Text Block] Risk Management Activities and Fair Value Measurements
As a multinational company with diverse product offerings, we are exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. There have been no significant changes in our risk management policies or activities during the six months ended December 31, 2022.
The Company has not changed its valuation techniques used in measuring the fair value of any financial assets and liabilities during the period. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers between levels during the periods presented. Also, there was no significant activity within the Level 3 assets and liabilities during the periods presented. There were no significant assets or liabilities that were remeasured at fair value on a non-recurring basis for the six months ended December 31, 2022.
Cash equivalents were $5.1 billion and $6.0 billion as of December 31, 2022 and June 30, 2022, respectively, and are classified as Level 1 within the fair value hierarchy. Other investments had a fair value of $86 and $140 as of December 31, 2022 and June 30, 2022, respectively, including equity securities of $60 and $113 as of December 31, 2022 and June 30, 2022, respectively, and are presented in Other noncurrent assets. Investments measured at fair value are primarily classified as Level 1 and Level 2 within the fair value hierarchy. Level 1 are based on quoted market prices in active markets for identical assets. Level 2 are based on quoted market prices for similar instruments. There are no material investment balances classified as Level 3 within the fair value hierarchy or using net asset value as a practical expedient. Unrealized losses on equity securities were $1 and $2 during the three months ended December 31, 2022 and 2021, respectively. Unrealized gains/(losses) on equity securities were $8 and $(31) during the six months ended December 31, 2022 and 2021, respectively. These unrealized gains/(losses) are recognized in Other non-operating income, net.
The fair value of long-term debt was $22.7 billion and $25.7 billion as of December 31, 2022 and June 30, 2022, respectively. This includes the current portion of long-term debt instruments ($3.6 billion as of December 31, 2022 and June 30, 2022). Certain long-term debt (debt designated as a fair value hedge) is recorded at fair value. All other long-term debt is recorded at amortized cost but is measured at fair value for disclosure purposes. We consider our debt to be Level 2 in the fair value hierarchy. Fair values are generally estimated based on quoted market prices for identical or similar instruments.
Disclosures about Financial Instruments
The notional amounts and fair values of financial instruments used in hedging transactions as of December 31, 2022 and June 30, 2022 are as follows:
Notional AmountFair Value AssetFair Value (Liability)
December 31, 2022June 30, 2022December 31, 2022June 30, 2022December 31, 2022June 30, 2022
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$3,983 $4,972 $— $3 $(484)$(307)
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS
Foreign currency interest rate contracts$11,381 $7,943 $47 $561 $(474)$(1)
TOTAL DERIVATIVES DESIGNATED AS HEDGING INSTRUMENTS$15,364 $12,915 $47 $564 $(958)$(308)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$5,203 $5,625 $47 $6 $(4)$(61)
TOTAL DERIVATIVES AT FAIR VALUE$20,567 $18,540 $94 $570 $(962)$(369)
The fair value of the interest rate derivative asset/(liability) directly offsets the cumulative amount of the fair value hedging adjustment included in the carrying amount of the underlying debt obligation. The carrying amount of the underlying debt obligation, which includes the unamortized discount or premium and the fair value adjustment, was $3.5 billion and $4.7 billion as of December 31, 2022 and June 30, 2022, respectively. In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The carrying value of those debt instruments designated as net investment hedges, which includes the adjustment for the foreign currency transaction gain or loss on those instruments, was $10.2 billion and $11.2 billion as of December 31, 2022 and June 30, 2022, respectively. The increase in the notional balance of derivative instruments designated as net investment hedges is partially offset by the decrease in debt designated as a net investment hedge due to maturities. The net increase in the total amount of instruments designated as net investment hedges is primarily driven by the Company's decision to leverage favorable interest rate spreads in the foreign currency swap market.
All derivative assets are presented in Prepaid expenses and other current assets or Other noncurrent assets. All derivative liabilities are presented in Accrued and other liabilities or Other noncurrent liabilities. Changes in the fair value of net investment hedges are recognized in the Foreign currency translation component of Other comprehensive income (OCI). All of the Company's derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy.
Substantially all of the Company's financial instruments used in hedging transactions are governed by industry standard netting and collateral agreements with counterparties. If the Company's credit rating were to fall below the levels stipulated in the agreements, the counterparties could demand either collateralization or termination of the arrangements. The aggregate fair value of the instruments covered by these contractual features that are in a net liability position was $911 and $219 as of December 31, 2022 and June 30, 2022, respectively. The Company has not been required to post collateral as a result of these contractual features.
Before tax gains on our financial instruments in hedging relationships are categorized as follows:
Amount of Gain/(Loss) Recognized in OCI on Derivatives
Three Months Ended December 31Six Months Ended December 31
2022202120222021
DERIVATIVES IN NET INVESTMENT HEDGING RELATIONSHIPS (1) (2)
Foreign exchange contracts$(1,013)$218 $(305)$426 
(1)For the derivatives in net investment hedging relationships, the amount of gain excluded from effectiveness testing, which was recognized in earnings, was $69 and $17 for the three months ended December 31, 2022 and 2021, respectively. The amount of gain excluded from effectiveness testing was $115 and $32 for the six months ended December 31, 2022 and 2021, respectively.
(2)In addition to the foreign currency derivative contracts designated as net investment hedges, certain of our foreign currency denominated debt instruments are designated as net investment hedges. The amount of gain/(loss) recognized in Accumulated other comprehensive income (AOCI) for such instruments was $(862) and $264 for the three months ended December 31, 2022 and 2021, respectively. The amount of gain/(loss) recognized in Accumulated other comprehensive income (AOCI) for such instruments was $(164) and $567 for the six months ended December 31, 2022 and 2021, respectively.

Amount of Gain/(Loss) Recognized in Earnings
Three Months Ended December 31Six Months Ended December 31
2022202120222021
DERIVATIVES IN FAIR VALUE HEDGING RELATIONSHIPS
Interest rate contracts$(49)$(61)$(180)$(97)
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
Foreign currency contracts$95 $54 $(51)$30 
The loss on the derivatives in fair value hedging relationships is fully offset by the mark-to-market impact of the related exposure. These are both recognized in Interest expense. The loss on derivatives not designated as hedging instruments is substantially offset by the currency mark-to-market of the related exposure. These are both recognized in Selling, general and administrative expense (SG&A).