What is Level 1,2 & 3 Inputs Quoted price in IFRS and how its Accounted/Treatment in Accountancy?

1.level one Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

2. Level two  Inputs other than quoted prices included within level1 that are observable for the asset or liability, either directly or indirectly, eg quoted prices for similar assets in active markets or for identical or similar assets in non active or use of quoted interest rates for valuation purposes.

3.level three Unobservable inputs for the assets or liability i.e using the entity's own assumption about market exit value.

These levels are used to  calculate the fair value of an item, with level one being the preferable method where available .

Inputs to valuation techniques are the assumptions that market participants would use in pricing the asset or liability.

IFRS Thirteen includes a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three (input) levels:

Level1 inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level2 inputs — Quoted prices are not available but fair value is based on observable market data.These are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level3 inputs —Unobservable inputs for the asset or liability.

An entity selects the valuation techniques:

• That are appropriate in the circumstances
• For which sufficient data is available; and
• That maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

Disclosure

An entity shall disclose the following information related to input levels:

1. Information about the hierarchy level into which fair value measurements fall.
2. Transfers between levels1 and2.
3. Methods and inputs to the fair value measurements and changes in valuation techniques; and
4. Additional disclosures for level3 measurements that include a reconciliation of opening and closing balances, quantitative information about unobservable inputs, unrealized gains / losses recognized in P&L, sensitivity to changes in unobservable inputs and assumptions used.