ExpertEasy1 markMultiple Choice
CPA · Question 45 · Area III: Select Transactions
Under ASC 820, which of the following inputs is considered Level 1 in the fair value hierarchy?
Under ASC 820, which of the following inputs is considered Level 1 in the fair value hierarchy?
Answer options:
A.
Quoted prices for similar assets in active markets
B.
Quoted prices for identical assets in active markets
C.
Inputs other than quoted prices that are observable
D.
Unobservable inputs reflecting the entity's own assumptions
How to approach this question
Level 1: Identical/Active (Stock price). <br/>Level 2: Similar/Observable (Real estate comps). <br/>Level 3: Unobservable (DCF model).
Full Answer
B.Quoted prices for identical assets in active markets✓ Correct
B
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Common mistakes
Confusing 'Identical' (Level 1) with 'Similar' (Level 2).
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