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Fair Value Measurements
 12 Months Ended
Dec. 31, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements

4. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

 

Level 1

   –   Valuations are based on quoted prices in active markets for identical assets or liabilities. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets.

Level 2

   –   Valuations based on inputs other than the quoted prices in active markets that are observable either directly or indirectly in active markets. Examples of assets and liabilities utilizing Level 2 inputs are U.S. government agency bonds, corporate bonds, commercial paper, certificates of deposit and over-the-counter derivatives.

Level 3

   –   Valuations based on unobservable inputs in which there is little or no market data, which require us to develop our own assumptions.

The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy:

 

     December 31, 2016  
     Total      Level 1      Level 2      Level 3  

Assets:

            

Money market funds

    $ 68,561       $ 68,561       $ —         $ —     

Corporate bonds

      58,410         —           58,410         —     

Commercial paper

      65,330         —           65,330         —     

Asset-backed securities

      4,884         —           4,884         —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 197,185       $ 68,561       $ 128,624       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  
     December 31, 2015  
     Total      Level 1      Level 2      Level 3  

Assets:

            

Money market funds

    $ 81,810       $ 81,810       $ —         $ —     

Certificates of deposit

      100         —           100         —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 81,910       $ 81,810       $ 100       $ —     
  

 

 

     

 

 

     

 

 

     

 

 

  

Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies certificates of deposit as Level 2. In certain cases, where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3. There were no transfers between Level 1 and Level 2 during the periods presented.

 

The carrying amounts reflected in the balance sheets for cash equivalents, other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values at both December 31, 2016 and December 31, 2015, due to their short-term nature.