XML 32 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Note 13 - Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
13.
Fair Value of Financial Instruments
 
Assets and Liabilities Measured at Fair-Value
– The Company believes the concepts for determining net realizable value are consistent with the guidance for measuring fair value. As a result, the Company follows authoritative guidance on fair value measurements, which defines fair-value, establishes a framework for measuring fair-value, and expands disclosures about fair-value measurements. The guidance applies to reported balances that are required or permitted to be measured at fair-value under existing accounting pronouncements.
 
The Company follows authoritative guidance on the fair value option for financial assets, which permits companies to choose to measure certain financial instruments and other items at fair-value in order to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently. However, the Company adopted the liquidation basis of accounting, and therefore reports all assets and liabilities at net realizable value.
 
The guidance emphasizes that fair-value is a market-based measurement,
not
an entity-specific measurement. Therefore, a fair-value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair-value measurements, the guidance establishes a fair-value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels
1
and
2
of the hierarchy, as defined under FASB ASC Topic
No.
820,
Fair Value Measurements) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level
3
of the hierarchy). In instances where the determination of the fair-value measurement is based on inputs from different levels of the fair-value hierarchy, the level in the fair-value hierarchy within which the entire fair-value measurement falls is based on the lowest level input that is significant to the fair-value measurement in its entirety. Our assessment of the significance of a particular input to the fair-value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
 
Fair Value Measurements -
The Company adopted the liquidation basis of accounting effective
September 1, 2015;
accordingly, the Company reports all real estate at their net realizable value.
 
The Company estimates the net realizable value of its real estate assets by using income and market valuation techniques. The Company
may
estimate net realizable values using market information such as broker opinions of value, appraisals, and recent sales data for similar assets or discounted cash flow models, which primarily rely on Level
3
inputs. The cash flow models include estimated cash inflows and outflows over a specified holding period. These cash flows
may
include contractual rental revenues, projected future rental revenues and expenses and forecasted capital improvements and lease commissions based upon market conditions determined through discussion with local real estate professionals, experience the Company has with its other owned properties in such markets and expectations for growth. Capitalization rates and discount rates utilized in these models are estimated by management based upon rates that management believes to be within a reasonable range of current market rates for the respective properties based upon an analysis of factors such as property and tenant quality, geographical location and local supply and demand observations. To the extent, the Company underestimates forecasted cash outflows (capital improvements, lease commissions and operating costs) or over estimates forecasted cash inflows (rental revenue rates), the estimated net realizable value of its real estate assets could be overstated.