4. Financial risk management (continued):  Fair Value of Financial Instruments 34  2011 Annual Report  Alaris Royalty Corp. The Corporation’s financial instruments as at December 31, 2011 and December 31, 2010 include  cash and cash equivalents, accounts receivable, investments, accounts payable and accrued liabilities,  and bank indebtedness. The fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and approximate their carrying amounts due to their short-terms to  maturity. Bank indebtedness bears interest at a floating market rate and accordingly the fair market  value approximates the carrying value. The fair values of the available for sale investments are  estimated using an approach described in note 5.  The table below analyzes financial instruments carried at fair value, by valuation method. The  different levels have been defined as follows:  The following items shown on the consolidated statement of financial position as at December 31,  2011 and 2010, and January 1, 2010, are measured at fair value on a recurring basis using level 1 or  level 2 inputs. The Corporation has no level 3 items and during the years ended December 31, 2011  and 2010, there were no transfers between level 1 or level 2 classified assets and liabilities.  December 31, 2011 Level 1 Level 2  Total  Cash and cash equivalents   $  3,888,465 $  - $  3,888,465  Foreign exchange derivatives - 21,864 21,864 Preferred LP units - 207,408,290 207,408,290  $  3,896,652 $ 207,430,154 $ 211,318,619  December 31, 2010  Cash and cash equivalents   $  1,816,868 $  - $  1,816,868  Preferred LP units - 182,907,000 182,907,000  $  1,816,868 $ 182,907,000 $ 184,723,868  January 1, 2010  Cash and cash equivalents   $  3,826,000 $  - $  3,826,000  Preferred LP units - 122,286,000 122,286,000  $  3,826,000 $ 122,286,000 $ 126,112,000  GLYPH<g120> Level 3: inputs for the asset or liability that are not based on observable market data  (unobservable inputs).  GLYPH<g120> Level 2: inputs other than quoted prices included within Level 1 that are observable for the  asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).  GLYPH<g120> Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.  Notes to Consolidated Financial Statements  Year ended December 31, 2011 