Practice prompt · Q:fair-value-measurement/transfer-valuation-evidence-001

Transfer the fair value path to an impaired warehouse

Tests whether the learner can preserve a supplied nonrecurring measurement requirement and classify a different valuation from its significant inputs.

Updated Sep 20, 2026 Review due Nov 20, 2026

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ASC 360 is supplied as requiring a nonrecurring fair value measurement of one impaired warehouse. The entity can access two property markets. The industrial property market has the greatest volume and activity; a smaller local market has a higher indicated price.

The appraiser uses observable sales of comparable industrial properties, then applies a significant unobservable adjustment for site-specific environmental remediation. The adjustment amount and significance conclusion are supplied.

Which conclusion preserves both the measurement boundary and the hierarchy analysis?

Choose the best answer. A Classify the warehouse as Level 2 because the appraiser began with observable sales of comparable properties. B Classify the warehouse as Level 3 because the lowest-level significant input is unobservable, and retain the supplied nonrecurring ASC 360 measurement boundary. C Classify the warehouse as Level 3 and conclude that the warehouse is a low-quality asset. D Use the market with the highest indicated price even though another accessible market has the greatest volume and activity.

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Answer: B

B. The supplied ASC 360 conclusion determines why the nonrecurring fair value measurement applies. The significant unobservable remediation adjustment makes the complete measurement Level 3.