Fair value


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Hello everybody

I'm from Brazil, and in my contry the term "fair value" caused many interpretations, and is a little confuse.
In your contry the interpretation about "fair value" is pacific for all the accounting users?
Good job to all!
Prof. Cláudio Cordeiro
 
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kirby

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Another description is "market value" (valor de mercado) and there are rules as to what to use in case you do not have a market value.
 
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Hi Kirby
Is there no difference between "fair value" and "market value"?
I think the concepts are different...
 
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bklynboy

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Hi Kirby
Is there no difference between "fair value" and "market value"?
I think the concepts are different...
Fair value is defined in US GAAP ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."

Fair value measurements are considered from the perspective of a market participant that already holds the asset or owes the liability. The objective of measuring fair value is to determine an exit price: the price that would be received to sell an asset or the price that would be paid to transfer the liability.

Generally FV equals MV when there are quoted prices in an active market. Where MV is not available then models or other facts are used to determine FV for accounting - this introduces subjectivity and may not be what others consider MV. You are correct it should not be confused with market value which is solely determined by supply and demand of the asset in the market. The key points is FV uses "exit price" and that its an "orderly market". These may not be always a market value.
 
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Hi, the IFRS develop a new standard related to the measure of the fair value, this standar is IFRS 13.
 
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