FUEL TECH, INC.FTEK

FUEL TECH, INC. Fair Value Disclosure

10-KFiled Mar 15, 20212 min read
15.
     FAIR VALUE MEASUREMENTS
 
We apply authoritative accounting guidance for fair value measurements of financial and non-financial assets and liabilities. This guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis and clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the standard establishes a
three
-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
 
 
•
Level
1
– Observable inputs to the valuation methodology such as quoted prices in active markets for identical assets or liabilities
 
 
•
Level
2
– Inputs to the valuation methodology including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means
 
 
•
Level
3
– Significant unobservable inputs in which there is little or
no
market data, which require the reporting entity to develop its own estimates and assumptions or those expected to be used by market participants. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, option pricing models, and other commonly used valuation techniques
 
Transfers between levels of the fair value hierarchy are recognized based on the actual date of the event or change in circumstances that caused the transfer. We had
no
assets or liabilities that were valued using level
2
or level
3
inputs and therefore there were
no
transfers between levels of the fair value hierarchy during the periods ended
December 31, 2020
and
2019
.

Historical Timeline

Fiscal YearFiled
2020Mar 15, 2021Showing above
2019Mar 12, 2020
2018Mar 14, 2019
2017Mar 12, 2018
2016Mar 14, 2017
2015Mar 24, 2016

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.

Other Available Disclosures

Income TaxesRevenuePP&ELeasesSegmentsDebtCommitmentsStock CompensationNew StandardsAward Timing Disclosure