Fair value measurement Flashcards
1
Q
Who are market participants?
A
Buyers and sellers that are independent and act in their best economic interests.
2
Q
What are the 3 valuation techniques used to determine fair value?
A
- Market approach
- Income approach
- Cost approach.
3
Q
How many levels of fair value exist and what are the inputs used in each level?
A
Level 1 = Quoted price in an active market for identical assets or liabilities
Level 2 = Quoted price for a similar asset or liability
Level 3 = Unobservable inputs (Projected cash flows, historical performance) on assumptions that a market participant would use
