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Fair Value Measurements | 3 Months Ended
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Jun. 30, 2020
Fair Value Disclosures [Abstract] |
14. Fair Value Measurements | Certain assets and liabilities are recorded at fair value on the consolidated balance sheets and are measured and classified based upon a three-tiered approach to valuation. Financial assets and liabilities are recorded at fair value and are classified and disclosed in one of the following three categories: Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 - Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management's assumptions about the assumptions a market participant would use in pricing the asset or liability. 31 amerco and consolidated subsidiaries notes to condensed consolidated financial statements - (continued) A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short-term investments, investments available-for-sale, long-term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade receivables approximate their recorded value. Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution. We have mortgage receivables, which potentially expose us to credit risk. The portfolio of notes is principally collateralized by self-storage facilities and commercial properties. We have not experienced any material losses related to the notes from individual or groups of notes in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings. The carrying amount of long-term debt and short-term borrowings are estimated to approximate fair value as the actual interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity. Other investments, including short-term investments, are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value. The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows: Fair Value Hierarchy Carrying Total Estimated As of June 30, 2020 Value Level 1 Level 2 Level 3 Fair Value (Unaudited) Assets (In thousands) Reinsurance recoverables and trade receivables, net $ 208,371 $ - $ - $ 208,371 $ 208,371 Mortgage loans, net 294,551 - - 294,551 294,551 Other investments 100,572 - - 100,572 100,572 Total $ 603,494 $ - $ - $ 603,494 $ 603,494 Liabilities Notes, loans and finance/capital leases payable 4,808,147 - 4,808,147 - 4,510,021 Total $ 4,808,147 $ - $ 4,808,147 $ - $ 4,510,021 32 amerco and consolidated subsidiaries notes to condensed consolidated financial statements - (continued) Fair Value Hierarchy Carrying Total Estimated As of March 31, 2020 Value Level 1 Level 2 Level 3 Fair Value (In thousands) Assets Reinsurance recoverables and trade receivables, net $ 186,672 $ - $ - $ 186,672 $ 186,672 Mortgage loans, net 262,688 - - 262,688 262,688 Other investments 97,685 - - 97,685 97,685 Total $ 547,045 $ - $ - $ 547,045 $ 547,045 Liabilities Notes, loans and leases payable 4,651,068 - 4,651,068 - 4,342,308 Total $ 4,651,068 $ - $ 4,651,068 $ - $ 4,342,308 The following tables represent the financial assets and liabilities on the condensed consolidated balance sheets as of June 30, 2020 and March 31, 2020 that are measured at fair value on a recurring basis and the level within the fair value hierarchy. As of June 30, 2020 Total Level 1 Level 2 Level 3 (Unaudited) Assets (In thousands) Short-term investments $ 629,550 $ 629,265 $ 285 $ - Fixed maturities - available for sale 2,370,821 7,614 2,363,047 160 Preferred stock 6,106 6,106 - - Common stock 16,595 16,595 - - Derivatives 1,763 1,763 - - Total $ 3,024,835 $ 661,343 $ 2,363,332 $ 160 Liabilities Derivatives 8,170 - 8,170 - Total $ 8,170 $ - $ 8,170 $ - As of March 31, 2020 Total Level 1 Level 2 Level 3 (In thousands) Assets Short-term investments $ 369,279 $ 368,968 $ 311 $ - Fixed maturities - available for sale 2,466,048 7,156 2,458,731 161 Preferred stock 6,675 6,675 - - Common stock 20,015 20,015 - - Derivatives 5,944 5,944 - - Total $ 2,867,961 $ 408,758 $ 2,459,042 $ 161 Liabilities Derivatives 8,214 - 8,214 - Total $ 8,214 $ - $ 8,214 $ - 33 amerco and consolidated subsidiaries notes to condensed consolidated financial statements - (continued) The fair value measurements for our assets using significant unobservable inputs (Level 3) were $ 0.2 million for both June 30, 2020 and March 31, 2020. 15. Revenue Recognition Revenue Recognized in Accordance with Topic 606 ASC Topic 606, Revenue from Contracts with Customers (Topic 606) , outlines a five-step model for entities to use in accounting for revenue arising from contracts with customers. The standard applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The standard also requires disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of amounts collected from customers for taxes, such as sales tax, and remitted to the applicable taxing authorities. We account for a contract under Topic 606 when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For contracts scoped into this standard, revenue is recognized when (or as) the performance obligations are satisfied by means of transferring goods or services to the customer as applicable to each revenue stream as discussed below. There were no material contract assets or liabilities as of June 30, 2020 and March 31, 2020. Sales of self-moving and self-storage related products are recognized at the time that title passes and the customer accepts delivery. The performance obligations identified for this portfolio of contracts include moving and storage product sales, installation services and/or propane sales. Each of these performance obligations has an observable stand-alone selling price. We concluded that the performance obligations identified are satisfied at a point in time under Topic 606, which is consistent with the timing of our revenue recognition under legacy guidance. The basis for this conclusion is that the customer does not receive the product/propane or benefit from the installation services until the related performance obligation is satisfied. These products/services being provided have an alternative use as they are not customized and can be sold/provided to any customer. In addition, we only have the right to receive payment once the products have been transferred to the customer or the installation services have been completed. Although product sales have a right of return policy, our estimated obligation for future product returns is not material to the financial statements at this time. Property management fees are recognized over the period that agreed-upon services are provided. The performance obligation for this portfolio of contracts is property management services, which represents a series of distinct days of service, each of which is comprised of activities that may vary from day to day. However, those tasks are activities to fulfill the property management services and are not separate promises in the contract. We determined that each increment of the promised service is distinct in accordance with paragraph 606-10-25-19. This is because the customer can benefit from each increment of service on its own and each increment of service is separately identifiable because no day of service significantly modifies or customizes another and no day of service significantly affects either the entity's ability to fulfill another day of service or the benefit to the customer of another day of service. As such, we concluded that the performance obligation is satisfied over time under Topic 606, which is consistent with the timing of our revenue recognition under legacy guidance for the Management Fee component of the compensation received in exchange for the service. Additionally, in certain contracts the Company has the ability to earn an incentive fee based on operational results. Historically, these fees have been recognized once fully determinable. Under Topic 606, we measure and recognize the progress toward completion of the performance obligation on a quarterly basis using the most likely amount method to determine an accrual for the incentive fee portion of the compensation received in exchange for the property management service. The variable consideration recognized is subject to constraints due to a range of possible consideration amounts based on actual operational results. The amount accrued in the first quarter of fiscal 2020 did not have a material effect on our financial statements. 34

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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