VOCS » Topics » Fair Value Measurements

This excerpt taken from the VOCS 10-Q filed May 11, 2009.
Fair Value Measurements
 
The Company measures certain financial assets at fair value, including cash equivalents and available-for-sale securities pursuant to Statement of Financial Accounting Standard No. 157, Fair Value Measurement (SFAS No. 157) which specifies a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:
 
Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities.
 
Level 2 — Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
 
Level 3 — Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.
 
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