Level 3 Inputs

Level 3 inputs are the most subjective and rely on the company’s own assumptions and estimates to value assets or liabilities. Unlike observable market data, they are not directly measurable or backed by active markets. These inputs are used when no comparable market prices exist, requiring the company to use models or estimates based on judgment, projections, or internal data. Examples include valuation of unique or illiquid assets, or complex financial instruments. Their use emphasizes the importance of transparency and careful approximation, as they can significantly influence financial statements.