cisco-annual-report-2021

11. Fair Value
(a) Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis were as follows (in millions):
JULY 31, 2021
FAIR VALUE MEASUREMENTS
Level 1 Level 2
JULY 25, 2020
FAIR VALUE MEASUREMENTS
Total
Balance Level 1 Level 2 Level 3
Total
Balance
Assets:
Cash equivalents:
Money market funds . . . . . . . . . . . . . . . . . . . $ 5,694 $ — $ 5,694 $ 9,687 $ — $ — $ 9,687
Commercial paper . . . . . . . . . . . . . . . . . . . . . — 114 114 — — — —
U.S. government securities . . . . . . . . . . . . . . — 300 300 — — — —
Corporate debt securities . . . . . . . . . . . . . . . . — — — — 8 — 8
Available-for-sale debt investments:
U.S. government securities . . . . . . . . . . . . . . — 1,794 1,794 — 2,685 — 2,685
U.S. government agency securities . . . . . . . . — 152 152 — 110 — 110
Corporate debt securities . . . . . . . . . . . . . . . . — 8,910 8,910 — 11,877 — 11,877
U.S. agency mortgage-backed securities. . . . — 2,862 2,862 — 2,035 — 2,035
Non-U.S. government agency securities . . . . — 3 3 — — — —
Commercial paper . . . . . . . . . . . . . . . . . . . . . — 1,190 1,190 — 727 — 727
Certificates of deposit . . . . . . . . . . . . . . . . . . — 295 295 — 176 — 176
Equity investments:
Marketable equity securities . . . . . . . . . . . . . 137 — 137 — — — —
Other assets:
Money market funds . . . . . . . . . . . . . . . . . . . 750 — 750 — — — —
Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . — 126 126 — 190 1 191
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,581 $ 15,746 $ 22,327 $ 9,687 $ 17,808 $ 1 $ 27,496
Liabilities:
Derivative liabilities. . . . . . . . . . . . . . . . . . . . $ — $ 20 $ 20 $ — $ 10 $ — $ 10
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ 20 $ 20 $ — $ 10 $ — $ 10
Level 1 marketable securities are determined by using quoted prices in active markets for identical assets. Level 2 availablefor-sale
debt investments are priced using quoted market prices for similar instruments or nonbinding market prices that are
corroborated by observable market data. Our derivative instruments are primarily classified as Level 2, as they are not actively
traded and are valued using pricing models that use observable market inputs. We did not have any transfers between Level 1 and
Level 2 fair value measurements during the periods presented. Level 3 assets include certain derivative instruments, the values
of which are determined based on discounted cash flow models using inputs that we could not corroborate with market data.
(b) Assets Measured at Fair Value on a Nonrecurring Basis
The carrying value of our non-marketable equity securities measured using the measurement alternative recorded to fair
value on a non-recurring basis is adjusted for observable transactions for identical or similar investments of the same issuer
or impairment. These securities are classified as Level 3 in the fair value hierarchy because we estimate the value based on
valuation methods using the observable transaction price at the transaction date and other unobservable inputs such as volatility,
rights, and obligations of the securities we hold.
(c) Other Fair Value Disclosures
The fair value of our short-term loan receivables and financed service contracts approximates their carrying value due to
their short duration. The aggregate carrying value of our long-term loan receivables and financed service contracts as of
July 31, 2021 and July 25, 2020 was $4.0 billion and $4.5 billion, respectively. The estimated fair value of our long-term loan
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