iRobot 2014 Annual Report Download - page 125

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
52
Fair Value Measurements
The authoritative guidance for fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own
assumptions.
Financial Assets
The Company’s financial assets measured at fair value on a recurring basis at December 27, 2014, were as follows:
Fair Value Measurements as of
December 27, 2014
Description Level 1 Level 2 Level 3
(In thousands)
Assets:
Money market funds $ 109,843 $ — $ —
Corporate and government bonds — 36,166 —
Total assets measured at fair value $ 109,843 $ 36,166 $ —
The Company’s financial assets measured at fair value on a recurring basis at December 28, 2013, were as follows:
Fair Value Measurements as of
December 28, 2013
Description Level 1 Level 2 Level 3
(In thousands)
Assets:
Money market funds $ 101,441 $ — $ —
Corporate and government bonds — 21,954 —
Total assets measured at fair value $ 101,441 $ 21,954 $ —
In each table above, the bond investments are valued based on observable market values as of the Company’s reporting
date and are included in Level 2. The bond investments are recorded at fair value and marked-to-market at the end of each
reporting period and realized and unrealized gains and losses are included in comprehensive income for that period. The fair
value of the Company’s bond investments are included in short term investments in its consolidated balance sheets.
Non-financial Assets
The Company's non-financial assets, which include goodwill, intangible assets, and property and equipment are not
required to be measured at fair value on a recurring basis. However, the Company evaluates the non-financial assets for
impairment if a trigger event occurs, or when an annual impairment test is performed. If the asset is determined to be impaired,
the asset is required to be recorded at fair value.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2014-15, “Presentation of Financial Statements - Going Concern.” ASU No. 2014-15 requires management of public and
private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if
so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new
standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning
after December 15, 2016. The Company does not believe that the impact of this amendment will be material to the Company’s
consolidated financial statements.
In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award
Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” ASU No. 2014-12 requires a
Form 10-K