FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value standard describes three levels within its hierarchy that may be used to measure fair value. Level Description Financial Instrument (Assets / Liabilities) Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Exchange traded derivative contracts. Marketable securities in active markets. Level 2 Observable inputs, including adjusted Level 1 quotes, quoted prices for similar assets or liabilities, quoted prices in markets that are less active than traded exchanges and other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Exchange traded derivative contracts (less liquid market). Level 3 Unobservable inputs that are supported by little or no market activity and that are a significant component of the fair value of the assets or liabilities. Assets and liabilities whose value is determined using proprietary pricing models, discounted cash flow methodologies or similar techniques. In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of input that is a significant component of the fair value measurement determines the placement of the entire fair value measurement in the hierarchy. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy levels. The Company’s policy regarding the timing of transfers between levels, including both transfers into and transfers out of Level 3, is to measure and record the transfers at the end of the reporting period. For a further definition of fair value and the associated fair value levels, refer to Note 15, Financial Instruments and Fair Value Measurements , included in the Company's 2018 Annual Report on Form 10-K. The following table sets forth, by level, the Company’s assets and liabilities that were accounted for at fair value on a recurring basis. Fair Value Measurements at Reporting Date September 30, 2019 December 31, 2018 (US$ in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Readily marketable inventories (Note 6) $ — $ 3,854 $ 583 $ 4,437 $ — $ 4,286 $ 246 $ 4,532 Unrealized gain on derivative contracts (1) : 1 Interest rate — 71 — 71 — 6 — 6 Foreign exchange 3 364 — 367 — 473 — 473 Commodities 24 429 12 465 128 407 18 553 Freight 19 — 3 22 6 — 6 12 Energy 41 — — 41 30 — — 30 Deferred purchase price receivable (Note 14) — 95 — 95 — 128 — 128 Other (2) 144 323 — 467 67 98 — 165 Total assets $ 231 $ 5,135 $ 598 $ 5,965 $ 231 $ 5,398 $ 270 $ 5,899 Liabilities: Trade accounts payable (3) $ — $ 509 $ 190 $ 699 $ — $ 394 $ 47 $ 441 Unrealized loss on derivative contracts (4): Interest rate — 14 — 14 — 42 — 42 Foreign exchange — 328 — 328 — 499 — 499 Commodities 35 245 20 300 152 446 23 621 Freight 26 — 4 30 13 — 6 19 Energy 31 — 2 33 43 — 1 44 Equity 1 — — 1 — — — — Total liabilities $ 93 $ 1,096 $ 216 $ 1,405 $ 208 $ 1,381 $ 77 $ 1,666 (1) Unrealized gains on derivative contracts are generally included in other current assets. There were $60 million and $3 million included in other non-current assets at September 30, 2019 and December 31, 2018 , respectively. There were also $7 million included in assets held for sale (Note 3) at September 30, 2019 . (2) Other includes the fair values of marketable securities and investments in other current assets and other non-current assets. (3) These payables are hybrid financial instruments for which the Company has elected the fair value option. (4) Unrealized losses on derivative contracts are generally included in other current liabilities. There are $1 million and $33 million included in other non-current liabilities at September 30, 2019 and December 31, 2018 , respectively. There were also $22 million included in liabilities held for sale (Note 3) at September 30, 2019 . Readily marketable inventories —RMI reported at fair value are valued based on commodity futures exchange quotations, broker or dealer quotations, or market transactions in either listed or OTC markets with appropriate adjustments for differences in local markets where the Company's inventories are located. In such cases, the inventory is classified within Level 2. Certain inventories may utilize significant unobservable data related to local market adjustments to determine fair value. In such cases, the inventory is classified as Level 3. If the Company used different methods or factors to determine fair values, amounts reported as unrealized gains and losses on derivative contracts and RMI at fair value in the consolidated balance sheets and consolidated statements of income could differ. Additionally, if market conditions change subsequent to the reporting date, amounts reported in future periods as unrealized gains and losses on derivative contracts and RMI at fair value in the consolidated balance sheets and consolidated statements of income could differ. Derivatives —The majority of exchange traded futures and options contracts and exchange cleared contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. The majority of the Company’s exchange-traded agricultural commodity futures are cash-settled on a daily basis and, therefore, are not included in these tables. The Company's forward commodity purchase and sale contracts are classified as derivatives along with other OTC derivative instruments relating primarily to freight, energy, foreign exchange and interest rates, and are classified within Level 2 or Level 3 as described below. The Company estimates fair values based on exchange quoted prices, adjusted as appropriate for differences in local markets. These differences are generally valued using inputs from broker or dealer quotations, or market transactions in either the listed or OTC markets. In such cases, these derivative contracts are classified within Level 2. OTC derivative contracts include swaps, options and structured transactions that are generally fair valued using quantitative models that require the use of multiple market inputs including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets which are not highly active, other observable inputs relevant to the asset or liability, and market inputs corroborated by correlation or other means. These valuation models include inputs such as interest rates, prices and indices to generate continuous yield or pricing curves and volatility factors. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. Certain OTC derivatives trade in less active markets with less availability of pricing information and certain structured transactions can require internally developed model inputs that might not be observable in or corroborated by the market. Level 3 Measurements The following relates to Level 3 measurements. An instrument may transfer into or out of Level 3 due to inputs becoming either observable or unobservable. Level 3 Readily marketable inventories and other —The significant unobservable inputs resulting in Level 3 classification for RMI, physically settled forward purchase and sale contracts, and trade accounts payable, relate to certain management estimations regarding costs of transportation and other local market or location-related adjustments, primarily freight related adjustments in the interior of Brazil and the lack of market corroborated information in Canada. In both situations, the Company uses proprietary information such as purchase and sale contracts and contracted prices to value freight, premiums and discounts in its contracts. Movements in the price of these unobservable inputs alone would not have a material effect on the Company's financial statements as these contracts do not typically exceed one future crop cycle. Level 3 Derivatives —Level 3 derivative instruments utilize both market observable and unobservable inputs within the fair value measurements. These inputs include commodity prices, price volatility, interest rates, volumes and locations. The tables below present reconciliations for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2019 and 2018 . These instruments were valued using pricing models that management believes reflect the assumptions that would be used by a marketplace participant. Three Months Ended September 30, 2019 (US$ in millions) Readily Derivatives, Trade Total Balance, July 1, 2019 $ 772 $ (14 ) $ (335 ) $ 423 Total gains and losses (realized/unrealized) included in cost of goods sold (1) 81 — 1 82 Purchases 329 — (14 ) 315 Sales (744 ) — — (744 ) Issuances — — — — Settlements — 2 158 160 Transfers into Level 3 213 1 (1 ) 213 Transfers out of Level 3 (68 ) — 1 (67 ) Balance, September 30, 2019 $ 583 $ (11 ) $ (190 ) $ 382 1) Readily marketable inventories, derivatives, net and trade accounts payable, include gains/(losses) of $60 million , $(1) million and $0 million , respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2019 . Three Months Ended September 30, 2018 (US$ in millions) Readily Derivatives, Trade Accounts Payable Total Balance, July 1, 2018 $ 1,225 $ 16 $ (265 ) $ 976 Total gains and losses (realized/unrealized) included in cost of goods sold (1) 80 (12 ) 4 72 Purchases 317 — (31 ) 286 Sales (898 ) — — (898 ) Issuances — (2 ) — (2 ) Settlements — (2 ) 231 229 Transfers into Level 3 255 (5 ) (1 ) 249 Transfers out of Level 3 (33 ) — (32 ) (65 ) Balance, September 30, 2018 $ 946 $ (5 ) $ (94 ) $ 847 1) Readily marketable inventories, derivatives, net and trade accounts payable, includes gains/(losses) of $50 million , $(19) million and $0 million , respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2018 . Nine Months Ended September 30, 2019 (US$ in millions) Readily Derivatives, Trade Total Balance, January 1, 2019 $ 246 $ (6 ) $ (47 ) $ 193 Total gains and losses (realized/unrealized) included in cost of goods sold (1) 263 (6 ) 14 271 Purchases 1,654 — (446 ) 1,208 Sales (2,077 ) — — (2,077 ) Issuances — (1 ) — (1 ) Settlements — 2 303 305 Transfers into Level 3 678 — (30 ) 648 Transfers out of Level 3 (181 ) — 16 (165 ) Balance, September 30, 2019 $ 583 $ (11 ) $ (190 ) $ 382 1) Readily marketable inventories, derivatives, net and trade accounts payable, include gains/(losses) of $160 million , $(10) million and $0 million , respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2019 . Nine Months Ended September 30, 2018 (US$ in millions) Readily Derivatives, Trade Total Balance, January 1, 2018 $ 365 $ 2 $ (116 ) $ 251 Total gains and losses (realized/unrealized) included in cost of goods sold (1) 189 (1 ) 17 205 Purchases 1,462 10 (282 ) 1,190 Sales (1,444 ) — — (1,444 ) Issuances — (11 ) — (11 ) Settlements — 5 381 386 Transfers into Level 3 530 (9 ) (80 ) 441 Transfers out of Level 3 (156 ) (1 ) (14 ) (171 ) Balance, September 30, 2018 $ 946 $ (5 ) $ (94 ) $ 847 1) Readily marketable inventories, derivatives, net and trade accounts payable, include gains/(losses) of $31 million , $(17) million and $0 million , respectively, that are attributable to the change in unrealized gains/(losses) relating to Level 3 assets and liabilities still held at September 30, 2018 . Certain assets and liabilities that have been classified as Assets held for sale and Liabilities held for sale are measured at fair value, less costs to sell, on a nonrecurring basis. In the third quarter of 2019 , the Company recognized impairment charges of $1,524 million |