ExpertEasy1 markMultiple Choice
CPA · Question 34 · Area III: Select Transactions
Which of the following is considered a Level 1 input in the Fair Value Hierarchy (ASC 820)?
Which of the following is considered a Level 1 input in the Fair Value Hierarchy (ASC 820)?
Answer options:
A.
Quoted prices in active markets for identical assets.
B.
Quoted prices for similar assets in active markets.
C.
Inputs other than quoted prices that are observable.
D.
Unobservable inputs (management estimates).
How to approach this question
Level 1: Identical/Active. Level 2: Similar/Observable. Level 3: Unobservable.
Full Answer
A.Quoted prices in active markets for identical assets.✓ Correct
A
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 Level 1 (Identical) with Level 2 (Similar).
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