Level 3
When you run a business the idea is to make money. At the end of the year you take your sales and subtract your expenses, hopefully that leaves you with a profit. Pretty simple yeah? Well if you have ever seen the financial statement of a publically traded company you know that there is a lot that goes into those figures. Basically a company has 3 levels of books. According to the Financial Accounting Standards Board, Level 1 comes from “quoted prices in active markets”. Basically things we know the value of, buildings, inventory, electricity bills, etc. Mark to Market value easily verified.
Level 2 is valued using “observable inputs” like recent transactions for similar items where market quotes may not be available. Lets call this Mark to Model. Sort of like when a realtor pulls comps in a neigborhood to value your home. A little more vague but still somewhat based in reality as well as prone to exageration.
This brings us to Level 3. Fair value is based on “the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).” In other words pure magic! Using Level 3 a company can make a bad Quarter into a good Quarter and hide such nastiness as oh I don’t know, shit loans they knew had no chance of being repaid! I read this on Bloomberg.com about a company that may or may not use stage coaches. “—- —– reported record net income of $2.28 billion, up 9 percent from a year earlier. Read the footnotes to its latest quarterly report, though, and you will see a new term in accounting lingo called ‘Level 3′ gains. Without these, the financial-services company’s earnings would have declined.”
Don’t worry America your government is in control. Here is some footage of Brittney Spears train wreck of a life to distract while your money get stolen from under your nose.
