Financial Instruments for Making Business Decisions
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Abstract
Financial decision-making tools using information used to measure fair value according to Financial Reporting Standard Version 13 classify fair value measurement data into two types: 1) observable data in the market and non-observable data in the market, ranked in the Fair Value Hierarchy, and 2) the data which is consistent and comparable with Financial Reporting Standard Version 13 that requires disclosure of fair value hierarchy levels in three tiers: Level 1, Level 2, and Level 3, based on the types of data used in calculations. Of levels of Inputs, Level 1: Quoted prices in active markets for similar assets or liabilities (Market price or market closing price), Level 2: Observable data from the market, such as quoted prices for similar assets or liabilities, and Level 3: data which cannot be significantly observed therefore, requires entity estimation including measuring the fair value of unmarketable investments, providing reliability, and disclosing fair value hierarchy to enhance the credibility of measurement information. The application of different levels of fair value measurements efficiently evaluates the value of assets and liabilities, enabling better comparison and reducing uncertainty in financial decision-making for investors and stakeholders.
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