Fair Value Hierarchy

The Fair Value Hierarchy is a framework that categorizes the inputs used to determine the value of an asset or liability into three levels. Level 1 includes prices from active markets for identical items, ensuring high reliability. Level 2 consists of inputs from similar assets or market data, offering moderate reliability. Level 3 involves estimates and assumptions, used when other data are unavailable, making it the least reliable. This hierarchy helps investors and companies assess how accurately they value their assets and ensures transparency in financial reporting.