Table:
| December 31, 2019 |  |  |  |  |
| --- | --- | --- | --- | --- |
|  | Level 1 | Level 2 | Level 3 | Total |
| Assets: |  |  |  |  |
| Money market funds | $107,708 | $— | $— | $107,708 |
| U.S. government agencies | — | 77,364 | — | 77,364 |
| Corporate debt securities | — | 207,137 | — | 207,137 |
| Total | $107,708 | $284,501 | $— | $392,209 |
| Liabilities: |  |  |  |  |
| Contingent consideration | $— | $— | $1,889 | $1,889 |
| Derivative liabilities | — | 748 | — | 748 |
| Total | $— | $748 | $1,889 | $2,637 |
|  |  |  |  |  |
| December 31, 2018 |  |  |  |  |
|  | Level 1 | Level 2 | Level 3 | Total |
| Assets: |  |  |  |  |
| Money market funds | $273,546 | $— | $— | $273,546 |
| U.S. government agencies | — | 72,840 | — | 72,840 |
| Corporate debt securities | — | 228,953 | — | 228,953 |
| Derivative assets | — | 623 | — | 623 |
| Total | $273,546 | $302,416 | $— | $575,962 |
| Liabilities: |  |  |  |  |
| Derivative liabilities | $— | $549 | $— | $549 |
| Stock warrant liability | — | — | 410 | 410 |
| Total | $— | $549 | $410 | $959 |
Paragraphs:
Fair Value Measurement of Financial Assets and Liabilities
The carrying values of the Company’s accounts receivable and accounts payable, approximated their fair values due to the short period of time to maturity or repayment.
The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):
The fair value of the Company’s Level 1 financial instruments is based on quoted market prices in active markets for identical instruments. The fair value of the Company’s Level 2 financial instruments is based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data.
In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, which are further discussed in Note 4. Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date using inputs such as spot rates, forward rates, and discount rates. There is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets.
Question:
What is the fair value of the Company's Level 1 financial instruments based on?
Answer: Quoted market prices in active markets for identical instruments