Page 30 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) (e) Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The following table provides an analysis of financial instruments held as at the end of the financial year that, subsequent to initial recognition, are measured at fair value. The financial instruments are grouped into Levels 1 to 3 based on the degree to which the fair value is observable, as follows: • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical instruments. The quoted market price used is the current bid price at the year end date. • Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the instrument, either directly (i.e., as prices) or indirectly (i.e., derived from prices). The fair value of financial instruments not traded in an active market is determined by using valuation techniques, which maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. • Level 3 fair value measurements are those derived from valuation techniques that include inputs for instruments that are not based on observable market data (unobservable inputs). The University has no financial instruments classified in Level 3. The fair value of accounts receivable, reverse repurchase agreements, cash and accounts payable approximates to the carrying value as the contractual cash flows are at current market interest rates that are available to the company for similar financial instruments. There were no transfers between levels during the year. Level 1 Level 2 Total $’000 $’000 $’000 2020 Quoted equities 22,087 - 22,087 Unit trusts - 246 246 2019 Quoted equities 21,768 - 21,768 Unit trusts - 116 116 University of Technology, Jamaica 146
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