What are Level 3 inputs in Americas Best Value Inn's fair value hierarchy?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). • Level 3 includes unobservable inputs that reflect assumptions about what factors market participants would use in
- pricing the asset or liability. We develop these inputs based on the best information available, including our own data.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 70–71)
What This Means (2025 FDD)
According to the 2025 Americas Best Value Inn Franchise Disclosure Document, Level 3 inputs within the fair value hierarchy are defined as unobservable inputs that reflect assumptions about what factors market participants would use in pricing an asset or liability. Americas Best Value Inn develops these inputs based on the best information available, including their own data.
In the context of Americas Best Value Inn's financial statements, the company estimates the fair value of its notes receivable using expected future receipts discounted at risk-adjusted rates. Both the expected future receipts and the risk-adjusted rates are considered Level 3 inputs.
For a prospective Americas Best Value Inn franchisee, understanding Level 3 inputs is crucial because these inputs directly impact how certain assets and liabilities are valued on the company's balance sheets. Since these inputs are unobservable and based on internal data and assumptions, it's important for franchisees to recognize that these valuations are subjective and could be subject to change based on Americas Best Value Inn's internal assessments and market conditions.