Sometimes it isn't obvious how an asset or liability should be valued.
In such cases, someone must come up with a value.
Depending upon the item, a firm can use one of three methods. The higher the method number, the more risky and unreliable the valuation:
Items in level 3 can be a bit dangerous, due to the number of assumptions being made.
The details for the value hierarchy are laid out in ASC 820-10-35-37.