ExpertEasy1 markMultiple Choice
CPA · Question 43 · 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.
Unadjusted 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 (e.g., interest rates).
D.
Unobservable inputs (e.g., management's cash flow forecast).
How to approach this question
Level 1: Quoted prices, Identical assets, Active market. Level 2: Similar assets or observable inputs. Level 3: Unobservable inputs.
Full Answer
A.Unadjusted quoted prices in active markets for identical assets.✓ Correct
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Common mistakes
Confusing Level 1 (Identical) with Level 2 (Similar).
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