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Fair Value Accounting
 6 Months Ended
Jun. 30, 2011
Fair Value Accounting  
Fair Value Accounting

(5)                    Fair Value Accounting

 

Financial instruments recorded at fair value in the condensed consolidated balance sheets, or disclosed at fair value in the footnotes, are categorized below based upon the level of judgment associated with the inputs used to measure their fair value.  Hierarchical levels defined by ASC 820, Fair Value Measurements and Disclosures, which are directly related to the amount of subjectivity associated with inputs to fair valuation of these assets and liabilities are as follows:

 

Level 1  –  Valued based on unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.  An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2  –  Valued based on either directly or indirectly observable prices for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3  –  Valued based on management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.  Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

 

The Company’s assets and liabilities that are measured at fair value consist of money market funds and certificates of deposit, both considered cash equivalents, which are categorized by the levels discussed above and in the table below:

 

30-Jun-2011

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Money market funds

 

$

9,632,000

 

$

—

 

$

—

 

$

9,632,000

 

Certificates of deposit

 

—

 

4,500,000

 

—

 

$

4,500,000

 

Total

 

$

9,632,000

 

$

4,500,000

 

$

—

 

$

14,132,000

 

 

31-Dec-2010

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Money market funds

 

$

9,500,000

 

$

—

 

$

—

 

$

9,500,000

 

Certificates of deposit

 

—

 

4,500,000

 

—

 

$

4,500,000

 

Total

 

$

9,500,000

 

$

4,500,000

 

$

—

 

$

14,000,000

 

 

As of June 30, 2011, the Company does not have any significant non-recurring measurements of nonfinancial assets and nonfinancial liabilities.  The Company may have additional disclosure requirements in the event an impairment of the Company’s nonfinancial assets occurs in a future period.

 

Fair Value of Other Financial Instruments

 

The Company has other financial instruments, such as accounts receivable, accounts payable and accrued taxes and other expenses, which are stated at carrying amounts that approximate fair value because of the short maturity of those instruments. The carrying amount of the Company’s long-term debt approximates fair value as the interest rate on the debt approximates the Company’s current incremental borrowing rate.