Asked by Rachel Lopke on Jun 29, 2024
Verified
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date are an example of:
A) a Level 1 input.
B) a Level 2 input.
C) a Level 3 input.
D) a Level 4 input.
Quoted Prices
The prices of securities that are publicly listed and available for investors to buy and sell.
Active Markets
Markets where transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 1 Input
denotes the highest-quality and most transparent valuation inputs for financial reporting, such as quoted prices in active markets for identical assets or liabilities.
- Identify and differentiate between Level 1, 2, and 3 inputs.
Verified Answer
CC
Courtney ClementsJul 02, 2024
Final Answer :
A
Explanation :
Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date are considered Level 1 inputs because they are the most objective and reliable inputs available. Level 2 inputs include quoted prices for similar assets or liabilities in inactive markets, while Level 3 inputs are unobservable inputs that must be estimated using assumptions and models. Level 4 inputs are not recognized under US GAAP.
Learning Objectives
- Identify and differentiate between Level 1, 2, and 3 inputs.