05-26-2021 Council Packet - Laserfiche WebLink

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CITY OF LITTLE CANADA, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2020 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) C.Investments (Continued) Fair Value Measurements The City uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The City follows an accounting standard which defines fair value, establishes framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements. In accordance with this standard, the City has categorized its investments, based on the priority of inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quotes and prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets and liabilities recorded on the combined statements of financial position are categorized based on the inputs to the valuation techniques as follows: Level 1 – Financial assets and liabilities are valued using inputs that are unadjusted quoted prices in active markets accessible at the measurement date of identical financial assets and liabilities. Level 2 – Financial assets and liabilities are valued based on quoted prices for similar assets or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 3 – Financial assets and liabilities are valued using pricing inputs which are unobservable for the asset, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset. Investment Type Level 1 Level 2 Level 3 Total U.S. Treasury Security $ 500,080 $ - $- $ 500,080 U.S. Agency: Fannie Mae (FNMA) 500,110 - 500,110 Negotiable Certificates of Deposit with Maturities at Purchase of Greater Than 1 Year - 7,776,888 - 7,776,888 Municipal Bonds - 855,083 - 855,083 Total Investments Measured at Fair Value $ 500,080 $9,132,081 $ - $ 9,632,161 Investments Measured at Amortized Cost 5,932,588 Total Investments $15,564,749 62