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FAIR VALUE MEASUREMENTS
 6 Months Ended
Mar. 31, 2012
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

11.                            FAIR VALUE MEASUREMENTS

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

 

Barnwell does not have any assets and liabilities that are required to be remeasured on a recurring basis.

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

 

Certain of our assets and liabilities are reported at fair value in the accompanying balance sheets on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.  The following table provides carrying value and fair value measurement information for nonrecurring fair value measurements recorded during the three and six months ended March 31, 2012 and March 31, 2011:

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

 

 

Carrying

 

Quoted

 

Significant

 

 

 

Total Reduction of

 

 

 

Amount

 

Prices in

 

Other

 

Significant

 

Carrying Value

 

 

 

as of

 

Active

 

Observable

 

Unobservable

 

for the three and

 

 

 

March 31,

 

Markets

 

Inputs

 

Inputs

 

six months ended

 

 

 

2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

March 31, 2012

 

Real estate held for sale*

 

 

$

10,786,000

 

 

 

$

-

 

 

 

$

10,786,000

 

 

 

$

-

 

 

 

$

 

1,854,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

 

 

Carrying

 

Quoted

 

Significant

 

 

 

Total Reduction of

 

 

 

Amount

 

Prices in

 

Other

 

Significant

 

Carrying Value

 

 

 

as of

 

Active

 

Observable

 

Unobservable

 

for the three and

 

 

 

March 31,

 

Markets

 

Inputs

 

Inputs

 

six months ended

 

 

 

2011

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

March 31, 2011

 

Investment in residential parcels*

 

 

$

2,830,000

 

 

 

$

-

 

 

 

$

2,830,000

 

 

 

$

 

-

 

 

 

$

 

190,000

 

 

Investment in joint ventures*

 

 

$

1,754,000

 

 

 

$

-

 

 

 

$

-

 

 

 

$

 

1,754,000

 

 

 

$

 

121,000

 

 

 

 

 

*    The fair values included in the tables above represent only those assets whose carrying values were adjusted to fair value in each respective period.

 

The fair value of our real estate held for sale was based on recent sales negotiations with a potential buyer of one of the homes.  The fair values of both homes were revised downward as a result of the information provided by those negotiations.  Such fair value measurements have been classified as Level 2 valuations.

 

In determining the fair value of Barnwell’s investment in residential parcels, prices for comparable sales transactions were used by an independent real estate consulting and appraisal firm to estimate fair value.  Such fair value measurements have been classified as Level 2 valuations.

 

Kona Village Resort sustained considerable damage as a result of the March 2011 tsunami and subsequently shutdown indefinitely.  As a result of the resort’s shutdown, Barnwell determined that the fair value of its investment in Kona Village Resort was zero and wrote off its investment in Kona Village Investors, LLC.

 

Fair Value of Financial Instruments

 

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued current liabilities and payables to joint interest owners approximate their fair values due to the short-term nature of the instruments.  The carrying value of long-term debt approximates fair value as the terms approximate current market terms for similar debt instruments of comparable risk and maturities.