Fair value is the price a market participant would pay for the reporting unit or intangible asset and is typically calculated using an income approach, such as a discounted cash flow or relief-from-royalty method. It is estimated by reviewing prices in market transactions involving identical or comparable assets or liabilities with a similar risk profile. According to the 10-K report for Starbucks, assets and liabilities recorded or disclosed at fair value on a recurring basis are determined based on three levels (sec.gov). Level one consists of the carrying value of cash and cash equivalents approximate fair value because of the short-term nature they have. Level two are quoted prices in active markets for identical assets. Depending on the nature of investment, using readily observable market data, the fair value is determined from available-for-sale securities and over-the-counter forward contracts, collars, and swaps based upon factors such as the quoted market price of similar
Fair value is the price a market participant would pay for the reporting unit or intangible asset and is typically calculated using an income approach, such as a discounted cash flow or relief-from-royalty method. It is estimated by reviewing prices in market transactions involving identical or comparable assets or liabilities with a similar risk profile. According to the 10-K report for Starbucks, assets and liabilities recorded or disclosed at fair value on a recurring basis are determined based on three levels (sec.gov). Level one consists of the carrying value of cash and cash equivalents approximate fair value because of the short-term nature they have. Level two are quoted prices in active markets for identical assets. Depending on the nature of investment, using readily observable market data, the fair value is determined from available-for-sale securities and over-the-counter forward contracts, collars, and swaps based upon factors such as the quoted market price of similar