FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2022

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

6. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

ASC 820, “Fair Value Measurement”, provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below.

● Level 1: Quoted prices in active markets for identical assets or liabilities.

● Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

● Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible.

The following tables present the fair value of the Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at:

September 30, 2022	Level 1		Level 2		Level 3		Total
Cash	$	1,113,207	$	—	$	—	$	1,113,207
Money market funds		116,952		—		—		116,952
Certificates of deposit		—		20,035		—		20,035
Commercial paper		—		234,310		—		234,310
Municipal securities		—		203,159		—		203,159
U.S. government agency securities		—		99,361		—		99,361
U.S. treasuries		—		935,178		—		935,178
Foreign currency derivatives		—		(204)		—		(204)
Total	$	1,230,159	$	1,491,839	$	—	$	2,721,998
Amounts included in:
Cash and cash equivalents	$	1,230,159	$	72,889	$	—	$	1,303,048
Short-term investments		—		1,346,781		—		1,346,781
Accounts receivable, net		—		694		—		694
Investments		—		72,373		—		72,373
Accrued liabilities		—		(898)		—		(898)
Total	$	1,230,159	$	1,491,839	$	—	$	2,721,998

December 31, 2021	Level 1		Level 2		Level 3		Total
Cash	$	749,089	$	—	$	—	$	749,089
Money market funds		440,826		—		—		440,826
Certificates of deposit		—		44,502		—		44,502
Commercial paper		—		335,477		—		335,477
Municipal securities		—		2,428		—		2,428
U.S. government agency securities		—		75,137		—		75,137
U.S. treasuries		—		1,528,149		—		1,528,149
Foreign currency derivatives		—		(278)		—		(278)
Total	$	1,189,915	$	1,985,415	$	—	$	3,175,330
Amounts included in:
Cash and cash equivalents	$	1,189,915	$	136,547	$	—	$	1,326,462
Short-term investments		—		1,749,727		—		1,749,727
Accounts receivable, net		—		654		—		654
Investments		—		99,419		—		99,419
Accrued liabilities		—		(932)		—		(932)
Total	$	1,189,915	$	1,985,415	$	—	$	3,175,330

All of the Company’s short-term and long-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments is based on other observable inputs, specifically a market approach which utilizes valuation models, pricing systems, mathematical tools and other relevant information for the same or similar securities. The Company’s valuation of its Level 2 foreign currency exchange contracts is based on quoted market prices of the same or similar instruments, adjusted for counterparty risk. There were no transfers between Level 1 and Level 2 measurements during the nine-months ended September 30, 2022, or during the year-ended December 31, 2021, and there were no changes in the Company’s valuation techniques.