Level 1

Learning objectives

• Identify a Level 1 input (unadjusted quoted price, active market, identical item, access at the measurement date).L1, L2

Normative references

• IFRS 13 §76Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
• IFRS 13 §77A quoted price in an active market provides the most reliable evidence of fair value and is used without adjustment whenever available, with limited exceptions.
• IFRS 13 §78At Level 1, the emphasis is on determining the principal market (or, failing that, the most advantageous market) and whether the entity can enter into a transaction at that price at the measurement date, since the same item may be traded in several active markets.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

4 questions

• An unadjusted quoted price, in an active market, for an identical asset to which the entity has access at the measurement date is a Level 1 input.L1
• Which of these inputs is a Level 1 input for the measurement of a share in Verdane, which the entity holds?L1
• A fund holds bonds issued by Castelle, traded daily in an active market accessible to the fund. Which of these inputs is Level 1 for measuring those bonds?L2
• An analyst classifies in Level 1 the measurement of a Prelane bond, on the grounds that it uses the quoted price, in an active market, of another Prelane bond from the same issuer but with a different maturity. What is the error?L2