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Fair Value Measurements
 9 Months Ended
Jul. 31, 2012
Fair Value Measurements [Abstract]  
Fair Value Measurements

(7) Fair Value Measurements

The carrying amounts reported in the condensed consolidated balance sheets as of July 31, 2012 for cash, trade accounts receivable, other receivables and accounts payable and accrued expenses, including accrued compensation and payroll taxes approximate fair value because of the short maturity of these instruments. The carrying amounts reported in the condensed consolidated balance sheets as of October 31, 2011 for cash, trade accounts receivable, other receivables, accounts payable and accrued expenses, including accrued compensation and payroll taxes and the current installments of long-term debt approximate fair value because of the short maturity of these instruments. The carrying value of the Company's note payable to bank approximates the fair value based on similar long-term debt issues available to the Company as of July 31, 2012 and October 31, 2011.

The fair value of the Company's long-term debt is estimated based on the borrowing rates currently available for the same or similar issues for debt of the same remaining maturities, and discounted back to the present value (income approach). As of July 31, 2012, the carrying value and estimated fair value of the Company's long-term debt was $8,048,364 and $8,688,497 respectively. As of October 31, 2011, the carrying value of the Company's long-term debt, excluding current installments, approximated the fair value based on similar long-term debt issues available to the Company. Fair value is defined as the amount 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.

ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs for valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows:

  • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
  • Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
  • Level 3 inputs are observable inputs for the asset or liability.

The Company utilizes the best available information in measuring fair value. The Company has determined that its long-term debt is valued using Level 2 inputs.