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Fair Value Measurements

This workbook summarizes the fair values of investments and other assets measured on either a recurring basis or nonrecurring basis during the period and accumulates information for note disclosures required by FASB ASC 820, Fair Value Measurements and Disclosures. Those requirements and further details on measuring fair value are discussed in Chapter 7 of PPC’s Preparing Nonprofit Financial Statements.

Entering Data

The Input and Valuation Inputs worksheets require the following information for each individual asset measured at fair value:
  1. A brief description
  2. The investment category and, if necessary, the investment class
  3. The measurement frequency (recurring basis or nonrecurring basis)
  4. Whether the asset was initially acquired or completely disposed of during the current period
  5. The fair value at the end beginning and end of the period
  6. The valuation methodologies/techniques used to measure the investment/investment class
  7. The types of inputs used for fair value measurement
  8. Other valuation considerations
  9. The input measurement level within the GAAP fair value hierarchy at the beginning and end of the period
Note: The comment boxes in the cells (denoted with a small red triangle in the upper right of the column headings) provide additional input assistance, including descriptions and examples of valuation methodologies, techniques, inputs, input levels, and other valuation considerations.
For the initial period this workbook is used, in addition to entering assets measured at fair value on a recurring basis at the end of the year, it is necessary to enter all assets measured at fair value on a recurring basis at the beginning of the year.  This is necessary for the Level 3 roll forward to function properly. In subsequent periods, the ending balances from the prior year can be rolled forward to the beginning balance fields by using the Roll forward to next year button.
Once the Input and Valuation Inputs worksheets are completed, the remaining worksheets automatically generate certain required note disclosures, with the exception of the Level 3 Reconciliation worksheet. This particular worksheet requires further inputs to complete the reconciliation and includes an Unallocated Reconciliation Activity column to assist in complete reconciliation.
The Level 3 Reconciliation worksheet shows only the assets from the input worksheets that are designated as requiring recurring fair value measurements using level 3 inputs at either the beginning or end of the reporting and that either: (1) had fair value balances at the beginning or end of the reporting period or (2) were initially acquired and/or completely disposed of during the reporting period. The information requested in this worksheet is necessary to satisfy some of the GAAP fair value measurement disclosure requirements. Specifically, the worksheet provides a roll forward reconciliation of fair value measurements. The amounts should be entered as positive amounts unless indicated with parentheses “()” surrounding the column heading.
The Level 3 Quantitative worksheet provides the format to document additional quantitative information about level 3 measurements as stated at FASB ASC 820-10-50-2 for years beginning after December 15, 2011 (or periods beginning after December 15, 2011 for public entities). That information should focus on the significant unobservable inputs used in the fair value measurement. The applicable asset categories and classes input on the Valuation Inputs worksheet will automatically generate on the Level 3 Quantitative worksheet. The white cells signify valid data entry areas.

Adding/Deleting Input Rows and Hiding/Showing Unused Input Rows

The summary worksheet provides 20 input rows. If the user wants to add input rows, click the Add row button at the top of the Input worksheet. Using this method will add an input row in both Input and Valuation Input worksheets that has complete formula and format functionality. Adding rows manually may compromise the integrity of the workbook. Likewise, deleting rows in the Input and Valuation Inputs worksheets will compromise the integrity of the workbook. If there are unused input rows on these worksheets that the user does not want to view or print, instead of deleting the rows, the user should click the Hide Empty Rows button at the top of the worksheet. Conversely, clicking the Show Empty Rows button will unhide any unused rows.
The Level 3 Reconciliation worksheet shows only the assets from the input worksheets that were designated as requiring level 3 inputs for measurement on a recurring basis. The information requested in this worksheet is necessary to satisfy some of the GAAP fair value measurement disclosure requirements. Specifically, the worksheet provides a roll forward reconciliation of fair value measurements estimated by using Level 3 inputs. The amounts should be entered as positive amounts unless indicated with parentheses “()” surrounding the column heading.