What does FASB stand for, according to the Bombs Away FDD?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
been recognized for long-lived assets.
Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
- Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.
- Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).
- Level 3 Unobservable inputs for the asset or liability.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, FASB stands for Financial Accounting Standards Board. This is mentioned in the context of fair value of financial instruments. The FDD specifies that FASB guidance dictates a hierarchy of valuation techniques based on whether the inputs are observable or unobservable.
Observable inputs are derived from independent market data, while unobservable inputs reflect market assumptions. The hierarchy prioritizes unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and gives the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of fair value hierarchy are: Level 1, which consists of financial instruments whose value is based on quoted market prices; Level 2, which includes inputs other than quoted prices within Level 1 that are observable; and Level 3, which includes unobservable inputs for the asset or liability. Bombs Away states that as of December 31, 2023, the carrying amounts of the company's financial assets and liabilities reported in the balance sheets approximate their fair value.