The fair value hierarchy categorizes the inputs used in valuation techniques into three levels:
- Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. - Level 2: Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. - Level 3: Unobservable inputs for the asset or liability. These inputs are used when there is little to no market activity for the asset or liability at the measurement date.