Section 3: 25–35%3E
Fair Value Measurements
ASC 820 defines fair value and establishes a three-level hierarchy that determines how reliable a fair value measurement is. The hierarchy is frequently tested — especially the distinction between levels and which level is most reliable. Fair value appears throughout FAR: investments, business combinations, impairment tests.
What AICPA Wants You to Know
- 1Define fair value using the exit price notion
- 2Apply the ASC 820 three-level fair value hierarchy
- 3Distinguish between recurring and non-recurring fair value measurements
- 4Identify the required note disclosures for each level of the hierarchy
- 5Apply the concept of principal market or most advantageous market