Company: ABBV
Filing Date: 2025-02-14
Form Type: 10-K
Source: 0001551152-25-000020
Chunk: 125

Company: AbbVie Inc.
Filing Date: 2025-02-14
Form: 10-K
Item: Item 3
Chunk 125
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 fair value measurement(in millions)TotalQuoted prices in active markets for identical assets (Level 1)Significant other observable inputs (Level 2)Significant unobservable inputs (Level 3)AssetsCash and equivalents$12,814 $6,223 $6,591 $— Money market funds and time deposits10 — 10 — Debt securities26 — 26 — Equity securities111 86 25 — Foreign currency contracts66 — 66 — Total assets$13,027 $6,309 $6,718 $— LiabilitiesInterest rate swap contracts$293 $— $293 $— Foreign currency contracts203 — 203 — Contingent consideration19,890 — — 19,890 Total liabilities$20,386 $— $496 $19,890 Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies. The financing liability is related to funding agreements entered into by Cerevel Therapeutics prior to the acquisition and assumed by AbbVie. The funding agreements represent financial instruments that are accounted for as financing arrangements and the company elected to account for the financing liability in accordance with the fair value option, as permitted under ASC 825 Financial Instruments. The fair value measurement of the financing liability was determined based on significant unobservable inputs. Potential payments are estimated by applying a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for sales milestones and royalty payments, which are then discounted to present value. Changes to the fair value of the financing liability can result from changes to one 

81     |  2024 Form 10-K

or a number of inputs, including discount rates, estimated probabilities and timing of achieving milestones and estimated amounts of future sales. The change in fair value recognized in net earnings is recorded in other expense, net in the consolidated statements of earnings and included a charge of $82 million in 2024. The change in fair value attributable to instrument-specific credit risk is recognized in other comprehensive loss and was not significant