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Question 5. Georgia Greetings and Accessories, Inc., (hereinafter referred to as GGAI) just purchased another entity, Louisiana Designer Yarn, Inc., (hereinafter referred to as LDYI)

Question 5. Georgia Greetings and Accessories, Inc., (hereinafter referred to as GGAI) just purchased another entity, Louisiana Designer Yarn, Inc., (hereinafter referred to as LDYI) in a business combination for a purchase price (consideration) valued at $ 6,500,000. Accordingly, GGAI must recognize on its books all of the separately identifiable assets and liabilities purchased valued at the fair value at the date of the purchase. One of the assets purchased that needs to be carried on GGAIs books at fair value is finished goods inventory held at a retail outlet of LDYIs. In order to value this inventory at a fair value, GGAI has found some prices for comparable items of inventory, namely what the price of the comparable items would likely be to customers in a retail market namely $ 250,000, as well as a price that would be charged for sale of the items to retailers in a wholesale market, namely $ 215,000. GGAIs appraisers feel that certain proper adjustments can be made to these prices (for the comparable items) to account for the differences between the condition of the LDYI merchandise and that of the comparable inventory items. The adjustments that the appraisers feel are justified are either an upward adjustment of $ 12,000 added to the wholesale price of $ 215,000, or possibly a downward adjustment from the retail price of $ 15,000 plus an additional subjective adjustment of approximately $ 4,000 (to be conservative).

What fair value should be used by GGAI to value the finished goods inventory? Is this value based on a level 1, 2, or 3 input?

Please cite all relevant Codifications for e.g. FASB ASC "???"

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