|WESTLAKE CHEMICAL CORP filed this Form 10-Q on 05/03/2018|
WESTLAKE CHEMICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—Continued
(in millions of dollars, except share amounts and per share data)
The following table summarizes the effect of foreign exchange derivative instruments designated as net investment hedges on accumulated other comprehensive income.
8. Fair Value Measurements
The Company reports certain assets and liabilities at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Under the accounting guidance for fair value measurements, inputs used to measure fair value are classified in one of three levels:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The Company has financial assets and liabilities subject to fair value measures. These financial assets and liabilities include cash and cash equivalents, accounts receivable, net, accounts payable and long-term debt, all of which are recorded at carrying value. The amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, net and accounts payable approximate their fair value due to the short maturities of these instruments. The Company has cross-currency swaps that are measured at fair value on a recurring basis. The future cash flows associated with these cross-currency swaps are discounted to present value using observable market-based inputs and published foreign exchange rates. The inputs used to measure the Company's cross-currency swaps are classified as Level 2 inputs within the fair value hierarchy. See Note 7 for the fair value of the Company's cross-currency swaps.
The carrying and fair values of the Company's long-term debt (including the current portion of long-term debt) are summarized in the table below. The Company's long-term debt instruments are publicly-traded. A market approach, based upon quotes from financial reporting services, is used to measure the fair value of the Company's long-term debt. Because the Company's long term debt instruments may not be actively traded, the inputs used to measure the fair value of the Company's long-term debt are classified as Level 2 inputs within the fair value hierarchy.