What does 360 Painting consider when determining fair value measurements for assets and liabilities?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company applies fair value accounting for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the company uses fair value accounting for financial and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. 360 Painting defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining fair value measurements for assets and liabilities required to be recorded at fair value, 360 Painting considers the principal or most advantageous market in which the company would transact. They also consider the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. These assumptions include inherent risk, transfer restrictions, and credit risk.
360 Painting also uses a fair value hierarchy that prioritizes the inputs used to measure fair value into three levels. The categorization within the hierarchy is based on the lowest level of input that is available and significant to the fair value measurement. This structured approach ensures that fair value measurements are consistently and reliably determined, reflecting market conditions and participant assumptions at the measurement date.