Question

What is the hierarchy used to establish Fair Value?

Answer 1

The hierarchy used to establish Fair Value is based on the level of inputs used to determine the value of an asset or liability. It consists of three levels: Level 1, Level 2, and Level 3.

Step-by-step explanation:

The hierarchy used to establish Fair Value is based on the level of inputs used to determine the value of an asset or liability. The Fair Value Hierarchy consists of three levels:

1. Level 1: Quoted prices in active markets for identical assets or liabilities.
2. Level 2: Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets or liabilities or derived from observable market data.
3. Level 3: Unobservable inputs that are based on the entity's own assumptions.

The hierarchy ensures that fair value measurements are based on reliable information and helps provide transparency to investors and users of financial statements.