The Prudential Series Fund

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2008, 2007, and 2006
Note 5: Fair Value Measurements
Fair Value Measurements:
SFAS 157 establishes a fair value measurement framework, provides a single definition of fair value and requires expanded
disclosure summarizing fair value measurements. This statement provides a three-level hierarchy based on the inputs used in the
valuation process. The level in the fair values hierarchy within which the fair value measurement falls is determined based on the
lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows;
Level 1- Fair values is based on unadjusted quoted prices inactive markets that are accessible to the company for identical assets
or liabilities. These generally provide the most reliable evidence and should be used tom measure fair value whenever available.
Level 2 – Fair value is based on inputs, other than Level 1 inputs, that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the asset or liability through corroboration with observable market data.
Level 3- Fair value is based on significant unobservable inputs for the asset or liability. These inputs reflect the company’s own
assumptions about the assumptions that market participants would use in pricing the asset or liability.
For items classified as Level 3, a reconciliation of the beginning and ending balances, as shown in table 2 below, is also required.
Please refer to Note 2D for discussion of valuation methodology.
B-12 Real Property