Incredimail 2011 Annual Report Download - page 108

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PERION NETWORK LTD. AND ITS SUBSIDIARIES
(Formerly: Incredimail Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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:
•
Level 1 - Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.
• 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.
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 is
categorized as Level 3.
The Company’
s marketable securities are traded in markets that are not considered active, but are valued based on quoted market prices, broker
or dealer quotations and, therefore, are categorized as Level 2.
The Company's assets (liabilities) measured at fair value on a recurring basis as of December 31, 2011, included money market funds and
treasury notes in the total amount of $ 40 presented as part of cash and cash equivalents and derivative financial instruments, in the amount of
$ (44) presented as part of accrued expenses and other liabilities, all measured using input type Level 2. The Company's assets measured at fair
value on a recurring basis as of December 31, 2010, included money market funds and treasury notes in the total amount of $ 9,094 presented
as part of cash and cash equivalents, marketable securities in the amount of $ 14,973 and derivative financial instruments, in the amount of $ 27
presented in other receivables and prepaid expenses, all measured using input type Level 2.
F
-
21