Fair Value of Financial Assets and Liabilities

9 Months Ended

Jun. 30, 2023

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

14.          Fair Value of Financial Assets and Liabilities

Under the fair value standards fair value is based on the exit price and defined as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement should reflect all the assumptions that market participants would use in pricing an asset or liability. A fair value hierarchy is established in the authoritative guidance outlined in three levels ranking from Level 1 to Level 3 with Level 1 being the highest priority.

Level 1: observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly

Level 3: unobservable inputs (e.g., a reporting entity’s or other entity’s own data)

The Company had no assets or liabilities measured at fair value on a recurring (except our pension plan assets and whole life insurance policies, see Note 11 for pension plan assets) or non-recurring basis as of June 30, 2023 or September 30, 2022.

To estimate fair value of the financial instruments below, quoted market prices are used when available and classified within Level 1. If this data is not available, we use observable market-based inputs to estimate fair value, which

are classified within Level 2. If the preceding information is unavailable, we use internally generated data to estimate fair value which is classified within Level 3.

		As of June 30, 2023				As of September 30, 2022
		Carrying Amount		Fair Value		Carrying Amount		Fair Value	Fair Value Level	Reference
		(Amounts in thousands)
Assets:
Cash and cash equivalents	$	13,848	$	13,848	$	23,982	$	23,982	1	Condensed Consolidated Balance Sheets
Accounts and long-term receivable*		16,596		16,596		16,328		16,328	3	Note 6
Liabilities:
Accounts payable and accrued expenses and other long-term liabilities*		3,590		3,590		4,622		4,622	3	Note 9
Line of Credit		1,308		1,308		3,124		3,124	2	Note 10
Notes payable		443		443		876		876	3	Note 10

*Original maturity over one year

Cash and cash equivalents

Carrying amount approximated fair value.

Accounts and long-term receivable with original maturity over one year

Fair value was estimated by discounting future cash flows based on the current rate with similar terms.

Line of credit

The fair value of our line of credit is based on borrowing rates currently available to a market participant for loans with similar terms or maturity. The carrying amount of our outstanding revolving line of credit approximates fair value because the base interest rate charged varies with market conditions and the credit spread is commensurate with current market spreads for issuers of similar risk. No interest accrues under the inventory line of credit when advances are paid within terms.

Notes Payable

Fair value was estimated by discounting future cash flows based on the current rate the Company could get in another transaction with similar terms based on historical information.

Fair value of accounts receivable with an original maturity of one year or less and accounts payable was not materially different from their carrying values as of June 30, 2023 and September 30, 2022.