Cronos Group Inc. Fair Value Disclosure
| As of December 31, 2020 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Cash and cash equivalents | $ | 1,078,023 | $ | — | $ | — | $ | 1,078,023 | |||||||||||||||
| Short-term investments | 211,766 | — | — | 211,766 | |||||||||||||||||||
| Derivative liabilities | — | — | 163,410 | 163,410 | |||||||||||||||||||
| As of December 31, 2019 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Cash and cash equivalents | $ | 1,199,693 | $ | — | $ | — | $ | 1,199,693 | |||||||||||||||
| Short-term investments | 306,347 | — | — | 306,347 | |||||||||||||||||||
| Derivative liabilities | — | — | 297,160 | 297,160 | |||||||||||||||||||
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.