Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 2 - Conceptual Framework for Financial Reporting - Review and Practice - Questions - Page 62: 16


A fair value in financial accounting can be viewed to as the price to be received on the sale of an asset or paid to transfer a liability in an orderly transaction that is between market participants at the measurement date. In the same manner, we can state that a fair value is therefore a market-based measure.

Work Step by Step

A fair value can also be viewed as the sale price agreed upon by two parties upon a willing buyer and seller, that is while assuming both parties enter the transaction freely and knowledgeably.
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