Incredimail 2009 Annual Report Download - page 96

Download and view the complete annual report

Please find page 96 of the 2009 Incredimail annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 133

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133

INCREDIMAIL LTD .
AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts of financial instruments carried at cost, including cash and cash equivalents, trade receivables
and trade payables approximate their fair value due to the short-term maturities of such instruments.
The Company adopted the provisions of ASC 820, "Fair Value Measurments and Disclosures" (formerly SFAS
No. 157), effective January 1, 2008. Under this standard, fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at
the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs
used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market
participants would use in pricing the asset or liability developed based on market data obtained from sources
independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the
assumptions market participants would use in pricing the asset or liability developed based on the best information
available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as
follows:
The availability of observable inputs can vary from investment to investment and is affected by a wide variety of
factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to
the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in
the market, the determination of fair value requires more judgment, and categorizes as Level 3.
The Company’s marketable securities trade in markets that are not considered active, but are valued based on quoted
market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency,
and therefore are categorized as Level 2.
The Company's assets measured at fair value on a recurring basis as of December 31, 2009, included money
market funds and treasury notes in the total amount of $7,839,000 presented as part of cash and cash
equivalents, marketable securities in the amount of $5,225,000 and derivative financial instruments, net in the
amount of $36,000 presented in other receivables and prepaid expenses, all measured using input type Level 2.
The Company's assets measured at fair value on a recurring basis as of December 31, 2008, included treasury
notes in the total amount of $2,100,000 presented as part of cash, and cash equivalents and marketable
securities in the amount of $18,790,000, all measured using input type Level 2.
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
u.
Fair value of financial instruments:
• Level 1—
Valuations based on quoted prices in active markets for identical assets that the Company has the
ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since
valuations are based on quoted prices that are readily and regularly available in an active market, valuation
of these products does not entail a significant degree of judgment.
•
Level 2
—
Valuations based on one or more quoted prices in markets that are not active or for which all
significant inputs are observable, either directly or indirectly.
•
Level 3
—
Valuations based on inputs that are unobservable and significant to the overall fair value
measurement.
F-15