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What is fair value

What is fair value
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Answer #1

Fair value is the
--sale price agreed upon by a buyer and seller,
--assuming both parties enter the transaction freely and knowledgeably.

In case of Investments, fair value determined by a market where the security is traded.

Fair Value differs from Book Value and market values. For example, an asset may be appearing in Balance Sheet at a net Book Value of $ 20,000, while its market value on prevailing date can be around $ 15,000. Fair Value will be calculated based on estimates and will be around market value.

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