AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015 5. FAIR VALUE MEASUREMENTS The FASB established a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organizations have the ability to access. • Level 2 Inputs to the valuation methodology include: • quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; • inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. • Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2015. Mutual funds: Valued at the net asset value (“NAV”) of shares held by the Organizations at year end. The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Organizations believe the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The values assigned to certain investments are based upon currently available information and do not necessarily represent amounts that may ultimately be realized. Because of the inherent uncertainty of valuation, those estimated fair values may differ significantly from the values that would have been used had a ready market for the investments existed and the differences could be material. The following table represents the Organizations' financial instruments measured at fair value on a recurring basis at December 31, 2015 for each of the fair value hierarchy levels: Fair Value Measurement at Reporting Date Using: Quoted Prices in Active Significant Other Significant Other Markets for Identical Assets Observable Inputs Unobservable Inputs Description Total (Level 1) (Level 2) (Level 3) Assets: Money Market $ 200,095 $ 200,095 $ - $ - Mutual Funds: Equity U.S. Large 30,416,688 30,416,688 - - Equity U.S. Mid/Small 5,048,384 5,048,384 - - Equity - International 14,076,783 14,076,783 - - Short-Term Bonds 4,106,913 4,106,913 - - Intermediate Bonds 15,282,509 15,282,509 - - Bonds - International 8,817,912 8,817,912 - - $ 77,949,284 $ 77,949,284 $ - $ - The carrying amounts for cash, cash equivalents, receivables, accounts payable and certain other assets and liabilities approximate fair value due to the short-term maturity of these financial instruments. 52 WELDING JOURNAL / JUNE 2016
Welding Journal | June 2016
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