It’s been said that the fair value of assets and liabilities (like beauty) is in the eye of the beholder. This is categorically not true when it comes to counseling clients as they prepare financial reports.
Companies are required to record certain assets and liabilities on their books at “fair value” the amount that the asset could be sold for or liability settled with a third party in an orderly transaction. Something is worth what someone will pay is straightforward in concept, but can be difficult to determine when active markets do not exist.
