What Is Fair Value?

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Fair value refers to the amount of purchase, sale or settlement reached by an asset or liability between the two parties when they are in force.

The biggest feature is that it comes from a fair trading market. It is a consensus reached by both rational parties participating in market pactions that fully consider the information of the market. This consensus price is fair value.

We can understand from the following aspects:

1. though

fair

Value must be generated in a fair and undisturbed market, but if there is no evidence to prove that the paction is unfair or involuntary, the market paction price is fair value.

2. the value of measurement object, which is not reached in the market, but the subjective value judgment of other different subjects, can not be regarded as fair value, because the value derived from different subjects.

information

Lack of comparability.

3. in cases where there are no actual pactions in certain matters, a similar paction price can be found in the market as the measurement basis of its fair value.

4. sometimes we can not find similar paction prices in the market. We must estimate the relevant measurement attributes on a fair and reasonable basis unless

market

On the contrary, there is evidence that the estimate is not true.