Contrary Opinions Raised by the Use of the Fair Value in the Context of Current Market Conditions

Author:Monica BIZON, Ph.D. Student

JEL:

DOI:

Keywords:fair value, amortised cost, assessment, financial instruments, liquid market

Abstract:
The fair value of an asset is the amount at which that asset could be bought or sold in a current transaction between willing parties, other than in a liquidation. On the other side of the balance sheet, the fair value of a liability is the amount at which that liability could be incurred or settled in a current transaction between willing parties, other than in a liquidation.\r\nIf available, a quoted market price in an active market is the best evidence of fair value and should be used as a basis for the measurement. If a quoted market price is not available, preparers should make an estimate of fair value using best information available. As a result, difficulties occur when making estimates of fair value and this is the reason for which this concept became a subject to many controversies.\r\n\r\n

---