Fair Value Hierarchy

AASB 13 introduces the concept of a "Fair Value Hierarchy" to "increase consistency and comparability in fair value measurements".

The hierarchy consists of three levels of inputs, namely:

  • Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
  • Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
  • Level 3 - unobservable inputs for the asset or liability.

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