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FAIR VALUE MEASUREMENTS
9 Months Ended
Mar. 31, 2012
FAIR VALUE MEASUREMENTS

NOTE 11 FAIR VALUE MEASUREMENTS

 

The Company adopted FASB ASC 820 for all financial assets and liabilities measured at fair value on a recurring basis. The Company adopted FASB ASC 820 effective July 1, 2009 for all non-financial assets and liabilities. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories:

 

Level 1 – Quoted prices in active markets for identical assets and liabilities.

 

Level 2 – Quoted prices in active markets for similar assets and liabilities, 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 – Significant inputs to the valuation model are unobservable.

 

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

 

The carrying amounts on the accompanying condensed consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable, accounts payable – related parties, royalty payable, accrued expenses, accrued expenses – related parties and current debt are carried at cost, which approximates market value.