CERTYNEX IFRS ACADEMY

Tolven measures an instrument with a model using a Level 2 yield curve and an unobservable liquidity adjustment equal to 0.2% of the value. After analysing the factors specific to the instrument, it judges (case judgement) this adjustment not significant to the measurement as a whole. In which level does it classify the measurement?

Level 3, because the presence of an unobservable input, however small, leads to that level.

Level 2, the Level 3 input not being significant to the measurement as a whole.

Level 1, because the unobservable adjustment is below one per cent of the value.

Level 3, because the liquidity adjustment is the last input introduced into the model.