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Fair Value Measurement | 6 Months Ended
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Mar. 31, 2020
Fair Value Disclosures [Abstract] |
Fair Value Measurement | Fair Value Measurement The Company measures and records certain assets and liabilities at fair value on a recurring basis. Authoritative guidance issued by the FASB establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1: Quoted market prices in active markets for identical assets or liabilities; Level 2: Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3: Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. During the year ended September 30, 2018, and as a result of the acquisition of Machinio, the Company recorded contingent consideration which was measured at fair value (Level 3). At September 30, 2019, the Company estimated the fair value of the contingent consideration using a Monte Carlo simulation. The simulation estimated Machinio's adjusted EBITDA over the calendar year 2019 earn-out period using a market-based volatility factor and market interest rates resulting in an average EBITDA. A present value factor was applied based on the expected settlement date of the contingent consideration. At March 31, 2020, the calendar year 2019 earn-out period was complete and the liability has been paid in full. The changes in the earn-out liability measured at fair value using Level 3 inputs to determine fair value for the six months ended March 31, 2020 are as follows:
(in thousands) | Contingent Consideration
Balance at September 30, 2019 | $ | 4,800 |
Change in fair value | 200 |
Settlement | (5,000) |
Balance at March 31, 2020 | $ | — |
The increase in the fair value of the earn-out liability is due to Machinio's full attainment of its actual adjusted EBITDA target for the calendar year 2019 earn-out period. The expense for the change in fair value was included in Other operating expenses in the Consolidated Statements of Operations. The earn-out liability was paid in full during the three months ended March 31, 2020. The Company also has short-term investments of $10.0 million and $30.0 million at March 31, 2020 and September 30, 2019, respectively, in certificates of deposit with maturities of six months or less, and interest rates between 1.76% and 2.50%. These assets were measured at fair value at March 31, 2020 and September 30, 2019 and were classified as Level 1 assets within the fair value hierarchy. The Company’s financial assets and liabilities not measured at fair value are cash and cash equivalents (which includes cash and commercial paper with original maturities of less than 90 days), accounts receivable, a promissory note and accounts payable. The Company believes the carrying values of these instruments approximate fair value. At March 31, 2020 and September 30, 2019, the Company did not have any assets or liabilities measured at fair value on a non-recurring basis.

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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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