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FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
Fair value is defined under U.S. GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability.
To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs in valuation methodologies used to measure fair value:
Level 1 - Measurements that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - Measurements that include other inputs that are directly or indirectly observable in the marketplace.
Level 3 - Measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. These fair value measurements require significant judgment.
In determining fair value, we use various valuation approaches within the fair value measurement framework. The valuation methodologies used for our assets and liabilities measured at fair value and their classification in the valuation hierarchy are summarized below:
Fair value option investments and available-for-sale securities. We use the discounted cash flow method, which is an income approach, to estimate the fair value of the investees. The key inputs to determining fair values under that approach are cash flow forecasts and discount rates. We also use a market approach valuation technique, which is based on market multiples of guideline companies, to determine the fair value of each entity.
We also have investments in redeemable preferred shares. We measure the fair value of those available-for-sale securities using the discounted cash flow method.
We have classified our fair value option investments and our investments in available-for-sale securities as Level 3 due to the lack of observable market data over fair value inputs such as cash flow projections and discount rates. Increases in projected cash flows and decreases in discount rates contribute to increases in the estimated fair values of the fair value option investments and available-for-sale securities, whereas
decreases in projected cash flows and increases in discount rates contribute to decreases in their fair values. Our fair value option investments were $0.0 million and $1.4 million as of December 31, 2020 and 2019.
Contingent consideration. We are subject to a contingent consideration arrangement to transfer a maximum payout in cash of $2.5 million to the former owners of a business acquired on April 30, 2018. See Note 5, Business Combinations, for further discussion of that acquisition.
The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2020, 2019 and 2018 (in thousands):
Year Ended December 31,
202020192018
Assets
Fair value option investments:
Beginning Balance$1,405 $73,902 $82,966 
Total gains (losses) included in earnings(1,405)(72,497)(9,064)
Ending Balance$— $1,405 $73,902 
Unrealized (losses) gains still held (1)
$(1,405)$(72,497)$(9,064)
Available-for-sale securities
Convertible debt securities:
Beginning Balance$— $— $11,354 
Proceeds from sales and maturities of convertible debt securities— — (8,594)
Transfer to other equity method investment upon conversion of convertible debt security — — (4,008)
Total gains (losses) included in other comprehensive income (loss)— — (1,148)
Total gains (losses) included in earnings (2)
— — 2,396 
Ending Balance$— $— $— 
Unrealized gains (losses) still held (1)
$— $— $— 
Redeemable preferred shares:
Beginning Balance$— $10,340 $15,431 
Total gains (losses) included in other comprehensive income (loss)— (379)379 
Impairments included in earnings— (9,961)(5,470)
Ending Balance$— $— $10,340 
Unrealized gains (losses) still held (1)
$— $(10,340)$(5,091)
Liabilities
Contingent Consideration:
Beginning Balance$1,298 $1,529 $— 
Issuance of contingent consideration in connection with acquisitions— — 1,589 
Settlements of contingent consideration liabilities(908)(312)— 
Total losses (gains) included in earnings6 39 56 
Foreign currency translation(70)42 (116)
Ending Balance$326 $1,298 $1,529 
Unrealized losses (gains) still held (1)
$6 $39 $56 
(1)Represents the unrealized gains or losses recorded in earnings and/or other comprehensive income (loss) during the period for assets and liabilities classified as Level 3 that are still held (or outstanding) at the end of the period.
(2)Represents a gain at maturity of a previously impaired convertible debt security, accretion of interest income and changes in the fair value of the embedded derivative.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis, including assets that are written down to fair value as a result of an impairment or increased due to an observable price change in an orderly transaction.
We recognized $109.5 million in non-cash impairment charges related to goodwill and $44.0 million in non-
cash impairment charges related to long-lived assets during the year ended December 31, 2020, of which $21.6 million is included in Restructuring and related charges on our consolidated statements of operations. See Note 6, Property, Equipment and Software, Net, Note 7, Goodwill and Other Intangible Assets, Note 11, Leases and Note 16, Restructuring and Related Charges, for additional information.
We recognized a $6.7 million impairment related to an other equity method investment during the year ended December 31, 2020. See Note 8, Investments, for additional information.
For the year ended December 31, 2019, we adjusted the carrying value of an other equity investment for observable price changes in an orderly transaction, which resulted in an unrealized gain of $51.4 million. See Note 8, Investments, for additional information.
For the year ended December 31, 2018, we recorded a $4.6 million impairment of an other equity investment. To determine the fair value of the investment, we considered the financial condition of the investee and applied a market approach. We have classified the fair value measurement of that other equity investment as Level 3 because it involves significant unobservable inputs. See Note 8, Investments, for additional information.
Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
Our financial instruments not carried at fair value consist primarily of accounts receivable, restricted cash, accounts payable, accrued merchant and supplier payables and accrued expenses. The carrying values of those assets and liabilities approximate their respective fair values as of December 31, 2020 and 2019 due to their short-term nature.