Seagate 2014 Annual Report Download - page 96
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SEAGATETECHNOLOGYPLC
NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS—(Continued)
9.FairValue
MeasurementofFairValue
Fairvalueisdefinedasthepricethatwouldbereceivedfromsellinganassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarket
participantsatthemeasurementdate.Whendeterminingthefairvaluemeasurementsforassetsandliabilitiesrequiredtoberecordedatfairvalue,theCompany
considerstheprincipalormostadvantageousmarketinwhichitwouldtransactanditconsidersassumptionsthatmarketparticipantswouldusewhenpricingthe
assetorliability.
FairValueHierarchy
Afairvaluehierarchyisbasedonwhetherthemarketparticipantassumptionsusedindeterminingfairvalueareobtainedfromindependentsources
(observableinputs)orreflectstheCompany'sownassumptionsofmarketparticipantvaluation(unobservableinputs).Afinancialinstrument'scategorizationwithin
thefairvaluehierarchyisbaseduponthelowestlevelofinputthatissignificanttothefairvaluemeasurement.Thethreelevelsofinputsthatmaybeusedto
measurefairvalue:
Level1—Quotedpricesinactivemarketsthatareunadjustedandaccessibleatthemeasurementdateforidentical,unrestrictedassetsorliabilities;
Level2—Quotedpricesforidenticalassetsandliabilitiesinmarketsthatareinactive;quotedpricesforsimilarassetsandliabilitiesinactivemarketsor
financialinstrumentsforwhichsignificantinputsareobservable,eitherdirectlyorindirectly;or
Level3—Pricesorvaluationsthatrequireinputsthatarebothunobservableandsignificanttothefairvaluemeasurement.
TheCompanyconsidersanactivemarkettobeoneinwhichtransactionsfortheassetorliabilityoccurwithsufficientfrequencyandvolumetoprovide
pricinginformationonanongoingbasis,andviewsaninactivemarketasoneinwhichtherearefewtransactionsfortheassetorliability,thepricesarenotcurrent,
orpricequotationsvarysubstantiallyeitherovertimeoramongmarketmakers.WhereappropriatetheCompany'sorthecounterparty'snon-performanceriskis
consideredindeterminingthefairvaluesofliabilitiesandassets,respectively.
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