(i) Fair Value Hierarchies

The fair value hierarchy categorizes the inputs used in valuation techniques into three levels, as follows:

• Level 1 Inputs
  Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A quoted market price in an active market provides the most reliable evidence of fair value and should be used without adjustment to measure fair value whenever available.
• Level 2 Inputs
  Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
  Level 2 inputs include:
  i. Quoted prices for similar assets or liabilities in active markets;
  ii. Quoted prices for identical or similar assets or liabilities in markets that are not active;
  iii. Inputs other than quoted prices that are observable for the asset or liability.
• Level 3 Inputs
  Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value when relevant observable inputs are not available, allowing for situations where there is little to no market activity for the asset or liability at the measurement date.

(ii) Principal Market vs. Most Advantageous Market

• Principal Market
  The principal market is the market with the greatest volume and level of activity for the asset or liability. This is the market that is most commonly used when determining the fair value of an asset or liability.
• Most Advantageous Market
  The most advantageous market is the market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after considering transaction costs and transport costs.

In determining fair value in the principal market, the following should be considered:

• Transaction Costs: These costs are not considered when determining fair value in the principal market.
• Transport Costs: These costs must be taken into account when determining fair value in the principal market.