Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between participants at measurement date. 

 

The fair value of a non-financial asset is measured based on its highest and best use. The asset’s current use is presumed to be its highest and best use. 

 

The fair value of financial and non-financial liabilities takes into account non-performance risk, which is the risk that the entity will not fulfill an obligation. 

 

The entity measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements: 

  • Level 1: Quoted prices in active markets for identical assets or liabilities; 

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and  

  • Level 3: Inputs for the asset or liability that are not based on observable market data.

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