What are Level 2 inputs in Americas Best Value Inn's fair value hierarchy?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 70–71)
What This Means (2025 FDD)
According to Americas Best Value Inn's 2025 Franchise Disclosure Document, Level 2 inputs within the fair value hierarchy include specific criteria used to measure the worth of assets and liabilities. These inputs consist of quoted prices for similar assets and liabilities in active markets, as well as quoted prices for identical or similar items in markets that are not actively trading.
Additionally, Level 2 inputs encompass observable data beyond just quoted prices, such as interest rates and yield curves, which can be used to assess the value of assets or liabilities. These inputs also include data derived from or supported by observable market information, using methods like correlation. This means that the valuation relies on market-based data to the extent available, providing a more objective measure of fair value.
For a prospective Americas Best Value Inn franchisee, understanding these valuation levels is crucial because it affects how certain assets and liabilities, particularly those related to acquisitions or financial instruments, are assessed on the company's balance sheets. This understanding can provide insight into the financial health and stability of the franchisor, Red Lion Hotels Corporation.