Level 3 Inputs

Definition

The lowest tier of the IFRS 13 fair value hierarchy, comprising unobservable inputs reflecting the reporting entity's own assumptions about the pricing that market participants would use. Level 3 measurements require the greatest degree of professional judgement and carry the highest estimation uncertainty. Virtually all intangible asset valuations in purchase price allocation rely on Level 3 inputs, including projected cash flows, royalty rates, and discount rates.