Question

Mitchell Enterprises decided to purchase 1,000 shares of Morgan Manufacturing’s common stock because Morgan produces one of the primary raw materials that Mitchell uses in their manufacturing process. Currently, Morgan’s stock is selling for $104 on the New York Stock Exchange. When this information is disclosed on Mitchell’s financial statements, the fair value of the stocks should be considered a ________ fair value measure.

Answer 1

Level 1

Step-by-step explanation:

According to US stock market regulatory body all Publicly traded companies must classify all of their assets based on the ease that they can be valued.

The Level 1 fair value measure assigned to the purchased 1,000 shares of Morgan Manufacturing because it has a readily observable, transparent price, therefore making it of fair market value.