Which of the Following Is an Example of a Level

question 21

Multiple Choice

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

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Definitions:

Goodwill Impairment

Goodwill impairment occurs when the fair value of goodwill drops below its carried value on the balance sheet, leading to a write-down in its value.

Cash-Generating Units

the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or groups of assets.

Business Combination

The process of uniting multiple businesses into one single entity, often through acquisitions or mergers.

Unrealized Profits

Gains on assets that have appreciated in value but have not been sold, and therefore, the gains are not reflected in the financial results as actual income.