Carrying value of impaired long-lived assets held for use

AGILENT TECHNOLOGIES, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)   
  
  
  
The contingent consideration liability is our only recurring Level 3 asset or liability. A summary of the Level 3 activity follows:  


|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Three Months Ended |  | Nine Months Ended  |
|  | July 31, |  | July 31, |
|  | 2022 |  | 2021 |  | 2022 |  | 2021 |
|  | (in millions) |
| Beginning balance | $ | 67  |  |  | $ | 96  |  |  | $ | 89  |  |  | $ | —  |  |
| Additions to contingent consideration (including measurement period adjustment) | $ | —  |  |  | $ | 14  |  |  | $ | 3  |  |  | $ | 110  |  |
| Change in fair value (included within selling, general and administrative expenses) | $ | —  |  |  | $ | —  |  |  | $ | (25) |  |  | $ | —  |  |
| Ending balance | $ | 67  |  |  | $ | 110  |  |  | $ | 67  |  |  | $ | 110  |  |

  
The fair value of the contingent consideration liability as of July 31, 2022 was estimated to be $67 million of which $66 million was recorded in other accrued liabilities and $1 million was recorded in other long-term liabilities on the condensed consolidated balance sheet. The net decrease in the fair value of the contingent consideration was primarily driven by a decline in the probability of achieving the revenue milestone related to our acquisition of Resolution Bioscience.  
Impairment of Investments. There were no impairments of investments for the three and nine months ended July 31, 2022 and 2021. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis  
For the three and nine months ended July 31, 2022, there were no impairments of long-lived assets held and used or long-lived assets held for sale. For the three months ended July 31, 2021, there were no impairments of long-lived assets held and used. For the nine months ended July 31, 2021, long-lived assets held and used with a carrying amount of $2 million were written down to fair value of zero, resulting in an impairment of $2 million. For the three and nine months ended July 31, 2021, there were no impairments of long-lived assets held for sale.  
For the three and nine months ended July 31, 2022 and 2021, there were no impairments of non-marketable securities. For the three and nine months ended July 31, 2022, an unrealized gain of $2 million and $5 million, respectively, was included in net income as an adjustment to the carrying value of non-marketable securities without readily determinable fair value based on an observable market transaction. For both the three and nine months ended July 31, 2021, an unrealized gain of $11 million was included in net income as an adjustment to the carrying value of non-marketable securities without readily determinable fair value based on an observable market transaction. As of July 31, 2022 and October 31, 2021, the carrying amount of non-marketable equity securities without readily determinable fair values was $136 million and $120 million, respectively.  
Fair values for the non-marketable securities included in long-term investments on the condensed consolidated balance sheet were measured using Level 3 inputs because they are primarily equity stock issued by private companies without quoted market prices. To estimate the fair value of our non-marketable securities, we use the measurement alternative to record these investments at cost and adjust for impairments and observable price changes (orderly transactions for the identical or a similar security from the same issuer) as and when they occur.  
10. DERIVATIVES We are exposed to foreign currency exchange rate fluctuations and interest rate changes in the normal course of our business. As part of our risk management strategy, we use derivative instruments, primarily forward contracts and purchased options to hedge economic and/or accounting exposures resulting from changes in foreign currency exchange rates. Cash Flow Hedges We enter into foreign exchange contracts to hedge our forecasted operational cash flow exposures resulting from changes in foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities between one and twelve months. These derivative instruments are designated and qualify as cash flow hedges under the criteria prescribed in the authoritative guidance and are assessed for effectiveness against the underlying exposure every reporting period. For open contracts as of July 31, 2022, changes in the time value of the foreign exchange contract are excluded from the assessment of hedge effectiveness and are recognized in cost of sales over the life of the foreign exchange contract. The changes in fair value of the effective portion of the derivative instrument are recognized in accumulated other comprehensive income (loss). 21
