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FINANCIAL INSTRUMENTS | 12 Months Ended
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Dec. 31, 2014
Fair Value Disclosures [Abstract] |
FINANCIAL INSTRUMENTS |
26. | FINANCIAL INSTRUMENTS
Foreign currency risk The majority of the Company's transactions, assets and liabilities are denominated in U.S. dollars, the functional currency of the Company. Certain of the Company's subsidiaries report in Sterling, Singapore dollars and Norwegian kroner and risks of two kinds arise as a result:
• | a transaction risk, that is, the risk that currency fluctuations will have a negative effect on the value of the Company's cash flows;
• | a translation risk, that is, the impact of adverse currency fluctuations in the translation of foreign operations and foreign assets and liabilities into U.S. dollars for the Company's consolidated financial statements.
Accordingly, such risk may have an adverse effect on the Company's financial condition and results of operations. The Company has not entered into derivative contracts for either transaction or translation risk. Forward freight agreements We did not enter into any FFAs in 2014. In 2013 and 2012, we entered a limited number of FFAs for speculative trading purposes. As of December 31, 2014, the Company had no contracts outstanding (2013: no contracts, 2012: 24 contracts). The Company recorded a loss on forward freight agreements of nil, $0.6 million and $1.7 million in 2014, 2013 and 2012, respectively, in "Mark to market loss on derivatives". Fair Values The carrying value and estimated fair value of the Company's financial instruments as of December 31, 2014 and 2013 are as follows:
| 2014 |  | 2013
(in thousands of $) | Carrying Value |  |  | Fair Value |  |  | Carrying Value |  |  | Fair Value |
Assets: |  |  |  |  |  |  |
Cash and cash equivalents | 64,080 |  |  | 64,080 |  |  | 53,759 |  |  | 53,759 |
Restricted cash and investments | 42,074 |  |  | 42,074 |  |  | 68,363 |  |  | 68,363 |
Marketable securities | 2,624 |  |  | 2,624 |  |  | 3,479 |  |  | 3,479 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
7.84% First Preferred Mortgage Term Notes | — |  |  | — |  |  | 185,838 |  |  | 129,381 |
8.04% First Preferred Mortgage Term Notes | 36,657 |  |  | 33,143 |  |  | 83,240 |  |  | 70,696 |
4.5% Convertible Bond | 126,700 |  |  | 114,347 |  |  | 190,000 |  |  | 140,315 |
Floating rate debt | 29,500 |  |  | 29,500 |  |  | — |  |  | — |
The estimated fair value of financial assets and liabilities are as follows:
(in thousands of $) | 2014 Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |
Cash and cash equivalents | 64,080 |  |  | 64,080 |  |  | — |  |  | — |
Restricted cash and investments | 42,074 |  |  | 42,074 |  |  | — |  |  | — |
Marketable securities | 2,624 |  |  | 2,624 |  |  | — |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
8.04% First Preferred Mortgage Term Notes | 33,143 |  |  | — |  |  | 33,143 |  |  | — |
4.5% Convertible Bond | 114,347 |  |  | — |  |  | 114,347 |  |  | — |
Floating rate debt | 29,500 |  |  | — |  |  | 29,500 |  |  | — |
(in thousands of $) | 2013 Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Assets: |  |  |  |  |  |  |
Cash and cash equivalents | 53,759 |  |  | 53,759 |  |  | — |  |  | — |
Restricted cash and investments | 68,363 |  |  | 68,363 |  |  | — |  |  | — |
Marketable securities | 3,479 |  |  | 3,479 |  |  | — |  |  | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
7.84% First Preferred Mortgage Term Notes | 129,381 |  |  | — |  |  | 129,381 |  |  | — |
8.04% First Preferred Mortgage Term Notes | 70,696 |  |  |  |  | 70,696 |  |  |
4.5% Convertible bond | 140,315 |  |  | — |  |  | 140,315 |  |  | — |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument; Cash and cash equivalents – the carrying values in the balance sheet approximate their fair value. Restricted cash and investments – the balances relate entirely to restricted cash and the carrying values in the balance sheet approximate their fair value. Marketable securities – the fair values are based on quoted market prices. First Preferred Mortgage Term Notes - the fair values are based on the quoted market price on the last significant trading of the Term Notes (level two per ASC Topic 820). Convertible bond – quoted market prices are not available, however the bonds are traded "over the counter" and the fair value of bonds is based on the market price on offer at the year end. Floating rate debt - the carrying value in the balance sheet approximates the fair value since it bears a variable interest rate, which is reset on a quarterly basis. Assets Measured at Fair Value on a Nonrecurring Basis At December 31, 2014, the VLCC Front Century was measured at fair value of $21.1 million (2013: $24.2 million), which was determined using level three inputs being the discounted expected cash flows from the leased vessel at June 30, 2013 of $25.8 million, less subsequent depreciation. Concentrations of risk There is a concentration of credit risk with respect to cash and cash equivalents to the extent that substantially all of the amounts are carried with Skandinaviska Enskilda Banken, or SEB, HSBC, Royal Bank of Scotland, DnB Nor Bank ASA, BNY Mellon and Nordea Bank Norge, or Nordea. There is a concentration of credit risk with respect to restricted cash to the extent that substantially all of the amounts are carried with SEB, Nordea, and HSBC. However, the Company believes this risk is remote.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
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