BASSETT FURNITURE INDUSTRIES INC Fair Value Disclosure

3.	Financial Instruments, Investments and Fair Value Measurements

 

Financial Instruments

 

Our financial instruments include cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, and accounts payable. Because of their short maturities, the carrying amounts of cash and cash equivalents, short-term investments in certificates of deposit, accounts receivable, and accounts payable approximate fair value.

 

Investments

 

Our short-term investments of $17,963 and $20,360 at November 29, 2025 and November 30, 2024 consisted of certificates of deposit (CDs) with original terms of six to twelve months, bearing interest at rates ranging from 2.01% to 4.21%. At November 29, 2025, the weighted average remaining time to maturity of the CDs was approximately three months and the weighted average yield of the CDs was approximately 4.0%. As the CDs mature, we expect to reinvest them in CDs of similar maturities of up to one year. Due to the nature of these investments and their relatively short maturities, the carrying amount of the short-term investments at November 29, 2025 and November 30, 2024 approximates their fair value.

 

Our investment in CDs at November 30, 2024 included one CD in the amount of $2,500 which was placed with a financial institution that provided merchant services for our retail segment. This CD was pledged as security for the merchant services agreement. The CD, which was in excess of federal deposit insurance limits, had a six-month term which was renewed through October of 2025 and an interest rate of 2.0%. The requirement to maintain the pledge was waived prior to the maturity of the CD, therefore it was allowed to mature and the funds were returned to cash and cash equivalents.

 

Fair Value Measurement

 

The Company accounts for items measured at fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

 

Level 1 Inputs– Quoted prices for identical instruments in active markets.

 

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

 

Level 3 Inputs– Instruments with primarily unobservable value drivers.

 

We believe that the carrying amounts of our current assets and current liabilities approximate fair value due to the short-term nature of these items. Our primary non-recurring fair value estimates typically involve the following: goodwill impairment testing (Note 7), which involves Level 3 inputs; and asset impairments (Note 14) which utilize Level 3 inputs.