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This excerpt taken from the PSMT 10-Q filed Apr 9, 2009. Fair Value Measurements
– In accordance with Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements,” as amended by Financial Accounting
Standards Staff Position (FSP) No. 157-1, "Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements that
address Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13" and FSP 157-2, "Effective Date of
FASB Statement No. 157" and FSP 157-3, "Determining the Fair Value of Financial
Assets when the Market for That Asset Is Not Active" (together referred to as
SFAS 157), the Company measures the fair value for all financial assets and
liabilities that are recognized or disclosed at fair value in the financial
statements on a recurring basis or on a nonrecurring basis during the reporting
period. The Company measures fair value for interest rate swaps and for put
contracts. While the Company adopted the provisions of SFAS 157 for nonfinancial
assets and liabilities that are recognized or disclosed at fair value in the
financial statements on a recurring basis, no such assets or liabilities exist
at the balance sheet date. The Company, in accordance with FSP 157-2, delayed
implementation of SFAS 157 for all nonfinancial assets and liabilities
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis. Nonfinancial nonrecurring assets and liabilities included on
the Company’s balance sheet include items such as goodwill and long lived assets
that are measured at fair value after taking into account impairment charges, if
any are deemed necessary. The Company measures fair value of
assets when triggering events occur in accordance with the provisions of SFAS
144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” and SFAS
142, "Goodwill and Other Intangible Assets", for business units and for
goodwill impairment.
SFAS 157
defines the fair value 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. SFAS 157 also establishes a fair
value hierarchy, which requires an entity to maximize the use of observable
inputs when measuring fair value. The standard describes three levels of
inputs:
Level 1:
Quoted market prices in active markets for identical assets or liabilities,
primarily consisting of financial instruments, such as money market mutual
funds, whose value is based on quoted market prices. The Company did
not revalue any assets or liabilities utilizing level one inputs at the balance
sheet date.
Level 2:
Observable market based inputs or unobservable inputs that are corroborated by
market data, normally including assets and liabilities with observable inputs
other than Level 1 prices, such as quoted prices for similar assets or
liabilities; or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or
liabilities. The Company's Level 2 assets and liabilities at the balance sheet
date primarily include cash flow hedges (interest rate swaps), and pricing of
assets in connection with the acquisition of a business. Valuation
methodologies are based on “consensus pricing” using market prices from a
variety of industry-standard data providers or pricing that considers various
assumptions, including time value, yield curve, volatility factors, credit
spreads, default rates, loss severity, current market and contractual prices for
the underlying instruments or debt, broker and dealer quotes, as well as other
relevant economic measures. All are observable in the market or can be derived
principally from or corroborated by observable market data for which the Company
typically receives independent external valuation information.
Level 3:
Unobservable inputs that are not corroborated by market data. This is normally
composed of assets or liabilities where their fair value inputs are unobservable
or not available, including situations involving limited market activity, where
determination of fair value requires significant judgment or
estimation. The Company did not revalue any assets or liabilities
utilizing level three inputs at the balance sheet date.
Valuation
techniques utilized in the fair value measurement of assets and liabilities
presented on the Company’s balance sheet were not changed from previous practice
during the reporting period. The Company discloses the valuation
techniques and any change in method of such within the body of each footnote on
an annual basis in accordance with SFAS 157.
9
PRICESMART,
INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
This excerpt taken from the PSMT 10-Q filed Jan 9, 2009. Fair Value Measurements
– In accordance with Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements,” the Company measures the fair
value of assets and liabilities. The Company measures fair value of assets when
impairment issues arise in accordance with the provisions of SFAS 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets,” for business
units (for goodwill impairment), for interest rate swaps, and for stock put
contracts. The Company uses fair value measurements based on quoted prices in
active markets for identical assets or liabilities (Level 1), significant other
observable inputs (Level 2) or unobservable inputs for assets or liabilities
(Level 3), depending on the nature of the item being valued. The Company
discloses on a yearly basis the valuation techniques and discloses any change in
method of such within the body of each footnote.
These excerpts taken from the PSMT 10-K filed Nov 12, 2008. Fair Value Measurements – In
accordance with Statement of Financial Accounting Standards (SFAS) No. 157,
“Fair Value Measurements,” the Company measures the fair value of assets and
liabilities on a non-recurring basis. The Company measures fair value of assets
when impairment issues arise in accordance with the provisions of SFAS 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets,” for business
units (for goodwill impairment), for interest rate swaps, and stock put
contracts. The Company uses fair value measurements based on quoted prices in
active markets for identical assets or liabilities (Level 1), significant other
observable inputs (Level 2) or unobservable inputs for assets or liabilities
(Level 3), depending on the nature of the item being valued. The Company
discloses on a yearly basis the valuation techniques and discloses any change in
method of such within the body of each footnote.
25
PRICESMART,
INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair Value Measurements – In accordance with Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” the Company measures the fair value of assets and liabilities on a non-recurring basis. The Company measures fair value of assets when impairment issues arise in accordance with the provisions of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” for business units (for goodwill impairment), for interest rate swaps, and stock put contracts. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2) or unobservable inputs for assets or liabilities (Level 3), depending on the nature of the item being valued. The Company discloses on a yearly basis the valuation techniques and discloses any change in method of such within the body of each footnote. 25 PRICESMART, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) | EXCERPTS ON THIS PAGE:
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