US Airways 2011 Annual Report Download - page 130

Table of Contents
6. Fair Value Measurements
The accounting guidance for fair value measurements, included in FASB ASC Topic 320, Investments — Debt and Equity Securities, defines fair
value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on
either a recurring or nonrecurring basis. This accounting guidance clarifies that fair value is an exit price, representing the amount that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should
be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, this
accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
L
e
v
e
l
1
.
Observable inputs such as quoted prices in active markets;
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
L
e
v
e
l
3
.
Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.
Assets measured at fair value on a recurring basis are as follows (in millions):
Quoted Prices in Significant Other Significant
Active Markets for Observable Unobservable
Identical Assets Inputs Inputs Valuation
Fair Value (Level 1) (Level 2) (Level 3) Technique
At December 31, 2011
Investments in marketable securities (noncurrent) $ — $ — $ — $ — —
At December 31, 2010
Investments in marketable securities (noncurrent) $ 57 $ — $ — $ 57 (1)
(1) At December 31, 2010, US Airways estimated the fair value of its auction rate securities based on the following: (i) the underlying structure of each
security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions;
(iii) consideration of the probabilities of default, passing a future auction, or repurchase at par for each period; and (iv) estimates of the recovery rates in
the event of default for each security. As of December 31, 2011, US Airways has liquidated its entire investment in auction rate securities. Refer to
Note 5(b) for further discussion of US Airways' investments in marketable securities.
Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows (in millions):
Investments in
Marketable
Securities
(Noncurrent)
Balance at December 31, 2009 $ 203
Sales of marketable securities (145)
Net unrealized losses recorded to other comprehensive income (1)
Balance at December 31, 2010 57
Sales of marketable securities (52)
Reversal of net unrealized gains recorded to other comprehensive income (3)
Losses recorded to other nonoperating expense, net (2)
Balance at December 31, 2011 $ —
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