Page 328 - TSMC 2018 Annual Report

Valuation techniques and assumptions used in Level 3 fair value measurement
The fair values of non-publicly traded equity investments are mainly determined by using the asset approach and market approach.
To determine the fair value, the Company utilizes the asset approach and takes into account the net asset value measured at the fair value by independent parties.
The market approach is used to arrive at their fair value, for which the recent financing activities of investees, the market transaction prices of the similar companies and market conditions are considered.
3) Fair value of financial instruments that are not measured at fair value
Except as detailed in the following table, the Company considers that the carrying amounts of financial instruments in the parent company only financial statements that are not measured at fair value approximate their fair values.
Fair value hierarchy
The table below sets out the fair value hierarchy for the Company’s assets and liabilities which are not required to measure at fair value:
Carrying Amount
2,294,098
91,800,000
Carrying Amount
December 31, 2018
Level 1
Level 2
Fair Value
Level 3 Total
Financial assets
Financial assets at amortized costs Commercial paper
Financial liabilities
Financial liabilities at amortized costs Bonds payable
$
$
$
$
-
-
$
$
2,296,188
93,171,255
$ -
$ -
$ 2,296,188
$ 93,171,255
Total
$ 118,020,699
Level 1
December 31, 2017
Fair Value
Level 2 Level 3
Financial liabilities at amortized costs Bonds payable
$ 116,100,000
Valuation techniques and assumptions used in Level 2 fair value measurement
$
-
$ 118,020,699 $ -
The fair value of commercial paper is determined by the present value of future cash flows based on the discounted curves that are derived from the quoted market prices.
The fair value of the Company’s bonds payable is determined by quoted market prices provided by third party pricing services.
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