Unobservable inputs for the asset or liability are an example of:
A)a Level 1 input
B)a Level 2 input
C)a Level 3 input
D)a Level 4 input

Question

Quizplus · Accepted Answer

Unobservable inputs, also known as Level 3 inputs, are those inputs that cannot be directly observed in the market and must be estimated based on assumptions and internal models. Therefore, option C is the correct answer. Option A is incorrect as Level 1 inputs are observable inputs, such as quoted prices in active markets. Option B is incorrect as Level 2 inputs are observable inputs, but not quoted prices like Level 1 inputs. Option D is incorrect as there is no Level 4 input in accounting standards.

Unobservable Inputs for the Asset or Liability Are an Example