Company: GWW
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000277135-25-000010
Chunk: 53

Company: W.W. GRAINGER, INC.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 8
Chunk 53
---
 instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. 
To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability or forecasted transaction, type of risk to be hedged, and how the effectiveness of the derivative is assessed prospectively and retrospectively. To assess effectiveness, the Company uses statistical methods and qualitative comparisons of critical terms. The extent to which a derivative has been and is expected to continue to be highly effective at offsetting changes in the fair value or cash flows of the hedged item is assessed and documented periodically. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued. For those derivative instruments that are designated and qualify as hedging instruments, the Company classifies them as fair value hedges or cash flow hedges.
Contingencies
The Company records a liability when a particular contingency is both probable and estimable. If the probable loss cannot be reasonably estimated, no accrual is recorded, but the loss contingency and the reasons to the effect that 
 47

it cannot be reasonably estimated are disclosed. If a loss is reasonably possible, the Company will provide disclosure to that effect.
For further discussion on the Company's contingencies, see Note 13.
New Accounting Standards
Accounting Pronouncements Recently Adopted
In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires public entities to disclose significant segment expenses and other segment items on an annual and interim basis. The effective date is for fiscal years beginning after December 15, 2023, with the option to early adopt prior to the effective date and requires application on a retrospective basis. The Company adopted this ASU effective December 31, 2024 on a retrospective basis and it did not have a material impact on the Consolidated Financial Statements. For the related segment reporting disclosure, see Note 12. 
Accounting Pronouncements Recently Issued
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures