What are some examples of Level 2 inputs for Chocolate Bash?

According to Chocolate Bash's 2024 Franchise Disclosure Document, Level 2 inputs are valuation techniques relying on observable market data, excluding Level 1 quoted prices. These inputs can be directly or indirectly observed, such as quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets/liabilities in inactive markets.

In simpler terms, Level 2 inputs use real-world data to estimate the value of financial instruments, but not direct prices from active markets. Instead, they might use prices of comparable items or prices from less liquid markets. This approach is more subjective than Level 1, but still relies on observable data.

For a prospective Chocolate Bash franchisee, understanding these levels is important for interpreting the company's financial statements. While the document states that the carrying amounts of Chocolate Bash's financial assets and liabilities approximate their fair value, knowing the valuation methods helps assess the reliability of those values. If Level 2 inputs are used, it suggests a degree of estimation based on market comparisons, which carries some inherent uncertainty compared to direct market prices.