Fair Market Value

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Fair Market Value

The amount for which real property or Personal Property would be sold in a voluntary transaction between a buyer and seller, neither of whom is under any obligation to buy or sell.

The customary test of fair market value in real estate transactions is the price that a buyer is willing, but is not under any duty, to pay for a particular property to an owner who is willing, but not obligated, to sell.

Various factors can have an effect on the fair market value of real estate, including the uses to which the property has been adapted and the demand for similar property.

Fair market value can also be referred to as fair cash value or fair value.

fair market value

n. the amount for which property would sell on the open market if put up for sale. This is distinguished from "replacement value," which is the cost of duplicating the property. Real estate appraisers will use "comparable" sales of similar property in the area to determine market value, adding or deducting amounts based on differences in quality and size of the property. (See: market value, appraiser)

References in periodicals archive ?
201 1-04, fair Value Measurement (Topic 820); Amendments to intendments to Achieve Common Fair value Measurement and Disclosure Requirements in US.
The reliance on a sole source exposes management to the risk of unreasonable fair values.
Casabona and Victoria Shoaf discuss the impact of the increasing use of fair value accounting and reporting in financial statements and the difficulties experienced in applying fair value guidance in measuring the fair values of certain assets and liabilities, especially for investments traded in inactive markets for which reliable observable market valuation inputs are not readily available.
New disclosure requirements from the FASB are intended to provide financial-statement users with greater transparency about the way reporting entities apply the fair value measurement provisions of U.
157, which maps out the hierarchy that provides direction on how fair values are determined.
Fair values reflect point estimates and by themselves do not result in transparent financial statements.
He added, "Understanding the detailed methodologies and assumptions used to estimate the fair values is critically important.
2) Corrections to the fair value calculations of certain embedded derivatives instruments.
Although ASC 350 permits that a detailed determination of fair value be carried forward from one year to the next, subsequent redetermination of reporting unit fair values necessary for goodwill impairment testing is required unless all of the following are met:
Good corporate governance over fair values should include a fair value committee that evaluates the quality of both external fair value information and internal methodologies employed to determine fair values that will be used in a company's financial statements.