World Fuel Services 2013 Annual Report Download - page 56

The purchase price for each of the 2011 acquisitions was allocated to the assets acquired and liabilities assumed based on their
estimated fair value at the acquisition date. On an aggregate basis, the purchase price allocation for the 2011 acquisitions is as follows
(in thousands):
Assets acquired:
Cash and cash equivalents $ 2,638
Accounts receivable 61,741
Inventories 40,246
Property and equipment 23,838
Identifiable intangible assets 23,414
Goodwill 46,282
Other current and long-term assets 15,717
Liabilities assumed:
Accounts payable (38,617)
Accrued expenses and other current liabilities (8,453)
Other long-term liabilities (5,070)
Purchase price $161,736
Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements and related notes include the accounts of our wholly-owned and majority-owned
subsidiaries and joint ventures where we exercise operational control or have a primary benefit of its profits. All significant
intercompany accounts, transactions and profits are eliminated upon consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Accordingly, actual results could materially differ from estimated amounts. We evaluate our estimated assumptions
based on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the
basis for making judgments about the carrying values of assets and liabilities.
Fair Value of Financial Instruments
The carrying amounts of cash, cash equivalents other than money market mutual funds, accounts receivable, accounts payable and
accrued expenses approximate fair value based on the short maturities of these instruments.
We measure our money market mutual funds, short-term investments and derivative contracts at their fair value in accordance with
accounting guidance for fair value measurement. We believe the carrying value of our debt approximates fair value since these
obligations bear interest at variable rates or fixed rates which are not significantly different than market rates.
The accounting guidance on fair value measurements and disclosures 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 us. Unobservable inputs are inputs that reflect our
assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best
information available under the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as
follows:
1. Level 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.
2. Level 2 Inputs – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly. We perform annual back-testing to validate that these inputs represent observable inputs that market participants use in
pricing an asset or liability.
3. Level 3 Inputs – Inputs that are unobservable for the asset or liability.
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