Which of the following is an example of a Level 3 input,according to the fair value hierarchy?
A) Quoted stock prices
B) Quoted prices for similar assets in active markets
C) Quoted prices in non-active markets
D) Future net cash flows used to value a business

Question

Quizplus · Accepted Answer

Level 3 inputs are unobservable inputs, meaning inputs that are not based on market data or that are not readily available. Future net cash flows used to value a business are an example of Level 3 inputs, as they require significant judgment and estimation to determine. Choices A and B are examples of Level 1 inputs, while Choice C is an example of Level 2 inputs.

Which of the Following Is an Example of a Level