TomTom 2011 Annual Report Download - page 74

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TomTom Annual Report and Accounts 2011
72
Notes to the Consolidated Financial Statements | continued
33. FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)
Fair value estimation
The group classifi es fair value measurements using a fair value hierarchy that refl ects the signifi cance of the inputs used in making the
measurements. The fair value hierarchy should have the following levels:
A – Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
B – Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (for example, as prices) or
indirectly (for example, derived from prices) and
C – Level 3: inputs for the asset or liability that are not based on observable market data.
The group’s fair value of fi nancial assets/liabilities carried at fair value through profi t or loss and the derivatives in a hedging relationship are
determined using valuation techniques (discounted cash fl ow analysis) that maximise the use of observable market data where it is available
and rely as little as possible on entity specifi c estimates. In accordance with the fair value hierarchy established by IFRS 7, these types of
inputs classify as Level 2 inputs.