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Fair Value Of Financial Instruments | 12 Months Ended
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Aug. 31, 2021
Fair Value Of Financial Instruments [Abstract] |
Fair Value Of Financial Instruments | 11. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into the following three levels based on reliability: Level 1 valuations are based on quoted prices in active markets for identical instruments that the Company can access at the measurement date. Level 2 valuations are based on inputs other than quoted prices included in Level 1 that are observable for the instrument, either directly or indirectly, for substantially the full term of the asset or liability including the following: a.quoted prices for similar, but not identical, instruments in active markets; b.quoted prices for identical or similar instruments in markets that are not active; c.inputs other than quoted prices that are observable for the instrument; or d.inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement. The book values of our financial instruments at August 31, 2021 and 2020 approximated their fair values. The assessment of the fair values of our financial instruments is based on a variety of factors and assumptions. Accordingly, the fair values may not represent the actual values of the financial instruments that could have been realized at August 31, 2021 or 2020, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement. The following methods and assumptions were used to determine the fair values of our financial instruments, none of which were held for trading or speculative purposes. Cash, Cash Equivalents, and Accounts Receivable – The carrying amounts of cash, cash equivalents, and accounts receivable approximate their fair values due to the liquidity and short-term maturity of these instruments. Other Assets – Our other assets, including notes receivable, were recorded at the net realizable value of estimated future cash flows from these instruments. Debt Obligations – At August 31, 2021, our debt obligations consisted primarily of a variable-rate term note payable and a note payable to the former owners of Strive. Our term note payable and revolving line of credit are negotiated components of our 2019 Credit Agreement, which was completed in August 2019 and modified in April 2021. Accordingly, the applicable interest rates on the term loan and revolving line of credit are reflective of current market conditions, and the carrying value of term loan and revolving line of credit (when applicable) obligations therefore approximate their fair value. Contingent Consideration Liabilities from Business Acquisitions We have contingent consideration liabilities arising from previous business acquisitions. We measure the fair values of our contingent consideration liabilities at each reporting date based on valuation models as described below. Changes to the fair value of the contingent consideration liabilities are recorded in selling, general, and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss) in the period of adjustment. The fair value of the contingent consideration liabilities from the acquisition of Robert Gregory Partners (RGP) and Jhana Education (Jhana) changed as follows during the fiscal year ended August 31, 2021 (in thousands):
|  |  |  |  | Change in |  |  |  |  |  |
AUGUST 31, |  | 2020 |  | Fair Value |  | Payments |  | 2021
RGP contingent liability |  | $ | 816 |  | $ | 16 |  | $ | (832) |  | $ | -
Jhana contingent liability |  |  | 3,067 |  |  | 177 |  |  | (1,149) |  |  | 2,095
|  | $ | 3,883 |  | $ | 193 |  | $ | (1,981) |  | $ | 2,095
At each quarterly reporting date, we estimate the fair value of our contingent consideration liabilities through the use of Monte Carlo simulations. However, the RGP contingent consideration measurement period ended on May 31, 2021 and the fair value of the final contingent payment was measured using the specified performance objectives in the purchase agreement rather than a Monte Carlo simulation. Based on the timing of expected payments, $1.3 million of the Jhana contingent consideration liability is recorded as a component of accrued liabilities at August 31, 2021. The remaining $0.8 million of the Jhana contingent consideration liability is reported in other long-term liabilities. Adjustments to the fair value of our contingent consideration liabilities are included in selling, general, and administrative expense in the accompanying consolidated statements of operations and comprehensive income (loss). The following additional information applies to our recurring contingent consideration liability shown above. Jhana Education – On July 11, 2017, we acquired the stock of Jhana. The purchase price included potential contingent consideration of $7.2 million through the measurement period, which ends in July 2026. The fair value of the Jhana contingent consideration is a Level 3 measurement because we estimate projected consolidated Company and AAP sales over the measurement period. Changes in expected qualifying revenues over the measurement period influence the timing and amount of these contingent payments to the former owners of Jhana.

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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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