Which of the following statements is not true regarding the hierarchy of fair value measurements now provided in GAAP?
A)The hierarchy clarified the inputs a company is to use to measure fair value.
B)The valuation method selected must be consistent with the market approach, the income approach, or the cost approach.
C)The three levels of inputs provide defined priorities for sources of available inputs for valuation.
D)The hierarchy eliminates all subjectivity and estimation from the valuation process.

Question

Quizplus · Accepted Answer

The hierarchy of fair value measurements does not eliminate all subjectivity and estimation from the valuation process. While the hierarchy provides guidance on the types of inputs to use, there is still a level of judgment involved in determining the appropriate inputs and applying them to arrive at a fair value measurement.

Which of the Following Statements Is Not True Regarding the Hierarchy