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 ?
What is certain, however, is that there will be more evolution of what we consider to be fair value in the months and years to come, particularly if the goal is ultimately to provide more transparency to users of the financial statements while hopefully making it easier for the preparers to implement and less costly to continuously account for.
Therefore, although real property might have been valued at fair value in the course of, for instance, a SFAS 141 business combination (in other words, as part of initial recognition), it would not subsequently be revalued for the balance sheet over time.
ASC Topic 820 also makes it clear that a fair value measurement does not include transaction costs.
The validity of exposing a business to a market (evaluating at fair value doesn't mean that we determine the value according to market prices and performances based on variations of fair value), is not a bad idea, but considering the existence of a liquid market and a process that measures a credible and fair fair value then users are given real guaranties regarding the real value of the business.
The financial crisis of 2008-2009 has generated a fierce debate about fair value accounting.
Amendments that dairy how to apply the existing fair value measurement and disclosure provisions in Topic 820.
* effects of fluctuations in fair value on the profit and loss account;
Accounting guidance establishes a fair value hierarchy, a summary for which follows.
Land or buildings held to earn rental income, held for capital appreciation or both (referred to as "Real Estate" or "Investment Property") would qualify for fair value accounting if the new rules are approved by FASB.
It strongly disagreed with the proposed additional fair value disclosures, particularly requirements to disclose effects from changing unobservable inputs; when use of an asset differs from the highest and best use when that asset is at fair value on the balance sheet; and categorization by fair value hierarchy level for items that are not measured at fair value but for which fair values are disclosed elsewhere.