Fair Value Framework - Introduction and Definition

in exchange

Maximum value to market participants would occur principally on a stand-alone basis (i.e., the price that would be received in a current transaction to sell the [single] asset).

in use

Maximum value to market participants would occur through its use in combination with other assets as a group

most advantageous market

the one in which the reporting entity could sell the asset at a price that maximizes the amount that would be received for the asset or that minimizes the amount that would be paid to transfer the liability.

principal market

the one with the greatest volume and level of activity for the asset or liability within which the reporting entity could sell the asset or transfer the liability.

fair value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

most advantageous market

transaction cost are taken into account when determining the

fair value

transaction costs are NOT taken into account when determining

settled or canceled

The determination of fair value of a liability assumes that the liability is transferred to a market participant at the measurement date; it is not _____________

credit risk

The determination of fair value of a liability should consider the effects of the reporting entity's

highest and best

The determination of fair value of a nonfinancial asset assumes the _______________ use of the asset by market participants, even if the intended use of the asset by the reporting entity is different

physically possible, legally permissible, and financially feasible

The highest and best use must take into account what is (assets)

continue

The liability to the counterparty (i.e., the party to whom the obligation is due) is assumed to

practical expedient exception

allows a company to use a "practical expedient" to measure the fair value of an investment that does not have a quoted market price but reports a net asset value per share (NAV).