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CITY OF LITTLE CANADA, MINNESOTA <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2019 <br /> <br /> <br /> <br /> <br /> <br />NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) <br />C. Investments (Continued) <br />Fair Value Measurements <br />The City uses fair value measurements to record fair value adjustments to certain asset and <br />liabilities and to determine fair value disclosures. <br /> <br />The City follows an accounting standard which defines fair value, establishes framework for <br />measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to <br />measure fair value, and requires expanded disclosures about fair value measurements. In <br />accordance with this standard, the City has categorized its investments, based on the priority of <br />inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy <br />gives the highest priority to quotes and prices in active markets for identical assets or liabilities <br />(Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the <br />financial instruments fall within different levels of the hierarchy, the categorization is based on the <br />lowest level input that is significant to the fair value measurement of the instrument. <br /> <br />Financial assets and liabilities recorded on the combined statements of financial position are <br />categorized based on the inputs to the valuation techniques as follows: <br /> <br />Level 1 – Financial assets and liabilities are valued using inputs that are unadjusted quoted prices <br />in active markets accessible at the measurement date of identical financial assets and liabilities. <br /> <br />Level 2 – Financial assets and liabilities are valued based on quoted prices for similar assets or <br />inputs that are observable, either directly or indirectly, for substantially the full term through <br />corroboration with observable market data. <br /> <br />Level 3 – Financial assets and liabilities are valued using pricing inputs which are unobservable for <br />the asset, inputs that reflect the reporting entity’s own assumptions about the assumptions market <br />participants would use in pricing the asset. <br /> <br />Investment Type Level 1 Level 2 Level 3 Total <br />Negotiable Certificates of Deposit with Maturities at <br /> Purchase of Greater Than 1 Year $ - $7,904,409 $ - $ 7,904,409 <br />Municipal Bonds - 852,678 - 852,678 <br /> Total Investments Measured at Fair Value $ - $8,757,087 $ - $ 8,757,087 <br />Investments Measured at Amortized Cost 4,244,880 <br /> Total Investments $13,001,967 <br /> <br /> <br /> <br /> <br />60