Fair Value Framework Flashcards
True/False:
Disclosures for fair value measurements are required for both interim and annual reports.
True
Disclosures must be segregated into each of the three levels within the FV hierarchy, and include what information?
-Description of valuation techniques
-inputs used
-changes in valuation techniques
-gains/losses for the period
True/False:
Quantitative disclosures must be presented in text format.
False - they must be provided in tabular format
True/False:
Level 3 inputs for FV measurement are unobservable.
True
What is a Level 1 input for FV measurement?
Quoted price for an identical asset
What is the range of input levels for FV measurement?
Levels 1-3, where level 1 is the highest priority.
What two assets/liabilities are specifically excluded from FV measurements?
Leases and pensions
At what point can a firm elect to use the FV option?
Date of recognition of investment
True/False:
FV cannot be applied on an instrument-by-instrument basis.
False - FV can be applied on an instrument-by-instrument basis. It must be separately disclosed.
What are the three FV valuation techniques?
Cost approach, market approach, and income approach
FV measurements assume ____________________ of the asset.
the highest and best use
Market-based exit price is not adjusted for ___________ cost, but is adjust for _____________ cost.
transaction, transportation
The principal market is the
market with the greatest volume and activity.
Can the FV be used for warrant obligations?
Yes, if the obligation can be settled by contracting with a third-party.
What market should be used if the asset can be sold in more than one market and there is no primary market?
the most advantageous market
