Question

Briefly describe the nature of level 1 inputs identified in the fair value framework of U.S. generally accepted accounting principles (GAAP).

Answer 1

Level 1 inputs in the fair value framework of U.S. GAAP are quoted prices for identical assets or liabilities in active markets. These inputs are based on observable market data and have the highest level of reliability.

Step-by-step explanation:

Level 1 inputs in the fair value framework of U.S. generally accepted accounting principles (GAAP) refer to quoted prices for identical assets or liabilities in active markets. These inputs have the highest level of reliability and are based on observable market data.

Examples of level 1 inputs include the closing prices of stocks traded on a major exchange or the prices of government bonds traded on an active market.