General form of registration statement for all companies including face-amount certificate companies

19. Fair Value Measurements (December 2013 Note)

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19. Fair Value Measurements (December 2013 Note)
 12 Months Ended
Dec. 31, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured at fair value on a recurring basis. ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

 

  ·           Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
  ·           Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
  ·           Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

We measure certain financial instruments at fair value on a recurring basis. As of December 31, 2013, there were no assets or liabilities measured at fair value on a recurring basis. As of December 31, 2012, assets and liabilities measured at fair value on a recurring basis were as:

 

    Total     Level 1     Level 2     Level 3  
Assets   $ –     $ –     $ –     $ –  
                                 
Total assets measured at fair value     –       –       –       –  
                                 
Liabilities                                
                                 
Derivative Liability     68,962       –       –       68,962  
Convertible Debenture, net of discount     514,853       –       –       514,853  
Total liabilities measured at fair value   $ 583,815     $ –     $ –     $ 583,815