Q. Financial Instruments

12 Months Ended

May 31, 2017

Note Q – Financial Instruments

Fair Value

The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate that value:

Investment Securities

Fair values for investment securities (U.S. Government, government agencies, government agency mortgage-backed securities, state and municipal securities, and equity securities) held for investment purposes (available-for-sale) are based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Other Financial Instruments

The carrying amount of cash, short-term investments, receivables, prepaid expenses, short-term and demand notes payable, accounts payable, accrued expenses and other liabilities approximate fair value because of the immediate or relatively short-term maturity of these financial instruments. Fair value of term notes payable, including notes payable under the bridge-financing arrangement, were deemed to approximate their carrying value based on the Company’s incremental borrowing rates for similar types of borrowings with maturities consistent with those remaining for the debt being valued.

The carrying amounts and fair values of the Company’s financial instruments at May 31, 2017 and 2016 are as follows:

	2017				2016
	Carrying Amount		Fair Value		Carrying Amount			Fair Value
ASSETS
Bonds available for sale	$	33,634,402	$	33,546,645	$	7,170,789		$	7,230,261
Cash and short-term investments		2,405,450		2,405,450		663,562			663,562
Premiums and other receivables		513,113		513,113		(76,413	)		(76,413	)
Equity securities (including derivatives)		2,465,221		2,422,476		1,550,217			1,488,440

LIABILITIES
Notes payable		6,463,439		6,463,439		6,861,954			6,861,954
Accounts payable and advance premiums		388,771		388,771		414,787			414,787
Accrued expenses and other liabilities		23,936,898		23,936,898		3,274,094			3,274,094

JACOBS FINANCIAL GROUP, INC. 10-K