Fair value


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Fair value

In the context of futures, the equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive).

Fair Market Value

A subjective estimate of what a willing buyer would pay a willing seller for a given asset, assuming both have a reasonable knowledge of the asset's worth. Fair market value is important in both law and accounting. In the former, it is often used in assessing damages as the result of a lawsuit. In the latter, determining the fair market value of an asset (e.g. after depreciation) is important to determining the amount of tax owed on it.
References in periodicals archive ?
Main changes to a principle or requirement for measuring lair value or disclosing fair value information relate to financial instruments managed within a portfolio: the use of premiums or discounts; and additional disclosures.
Because the fair value of a GIK is determined when it is contributed to an NFP, it is important to determine when a contribution occurs.
Additionally, the methodology for measuring fair value is nearly identical under both sets of standards, and fair value disclosure requirements are largely the same.
When the indemnifying party (or guarantor) is not legally obligated (under the tax law) to pay taxes covered by an indemnification agreement, FIN 45 may apply to require the guarantor to recognize a liability for the fair value of the guarantee at inception.
If markets were liquid and transparent for all assets and liabilities, fair value accounting clearly would be reliable information useful in the decisionmaking process.
It provides an understanding of the topic, concrete practical guidance, and support for those who wish to implement fair value measurements and fair value accounting.
Consideration that includes share-based payment awards resulting from the acquirer's obligation to replace share-based payment awards of the acquiree is measured at the fair value of the acquirer's replacement award.
The first quarter of 2008 is likely to usher in the first significant wave of financial statements from companies that have adopted FASB's new fair value option for financial assets and liabilities.
Fair value is determined to be a market-based measurement, and the standard sets up the hierarchy for determining the fair value based on "observable" inputs (ready markets, etc.
Opinion is split on whether fair value will be the chosen standard.
Company A designates the swap as a fair value hedge of its fixed-rate asset.
Since fair value accounting methods and assumptions will vary," said Tim E.