Company: EQS
Filing Date: 2025-04-10
Form Type: 10-K
Source: 0001712543-25-000016
Chunk: 36

Company: EQUUS TOTAL RETURN, INC.
Filing Date: 2025-04-10
Form: 10-K
Item: Item 8
Chunk 36
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 to the debt instrument, we perform a yield analysis assuming a hypothetical
current sale of the security to determine if a debt security has been impaired. The yield analysis considers changes in interest rates
and changes in leverage levels of the portfolio company as compared to the market interest rates and leverage levels.

We record
unrealized depreciation on investments when we determine that the fair value of a security is less than its cost basis, and will record
unrealized appreciation when we determine that the fair value is greater than its costbasis.

Fair Value Measurement - Fair
value is 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 and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined
as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are describedbelow:

Level 1 - Unadjusted
quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement
date.

Level 2 - Inputs
other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value
is determined through the use of models or other valuation methodologies.

Level 3 - Inputs
are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability.
The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant
management judgment or estimation.

In certain
cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s
level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment
of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific
to the investment.

Investments for
which prices are not observable are generally private investments in the debt and equity securities of operating companies. One of the
primary valuation methods used to estimate the fair value of these Level

3 investments is the discounted cash
flow method (although a liquidation analysis, option theoretical, or other methodology may be used when more appropriate). The discounted
cash flow