2 min read
Definition
Fair value is the price receivable to sell an asset (or payable to transfer a liability) in an orderly transaction between market participants at the measurement date. Some assets are held at fair value rather than historical cost.
In plain terms
It is the honest market price today, not what you paid years ago. Property held at fair value can carry far above its original cost.
Why it matters for your company
Fair value drives security valuations and some balance-sheet figures. Lenders test book values against fair value when sizing a facility. See valuation.
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