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Accounting & Tax vocabulary · Reporting Standards

Fair value

Meaning in accounting & tax, with examples

nounAdvanced term

In accounting & tax, fair value means: The price that would be received to sell an asset, or paid to transfer a liability, in a normal transaction between market participants on a given date.

In Turkish: gerçeğe uygun değer

How it is used

Defined in IFRS 13 and used for financial instruments, investment property and acquisitions. Items are measured either at fair value or at cost; changes may go through profit or loss or other comprehensive income.

Example sentences

  1. The investment property is measured at fair value, based on an independent valuation.

  2. The fair value of the derivatives fell sharply at year-end.

Common collocations

  • measure at fair value
  • fair value hierarchy
  • fair value through profit or loss
  • fair value adjustment
  • IFRSInternational Financial Reporting Standards: the global accounting rules issued by the IASB and required for listed companies in more than 140 jurisdictions.
  • impairmentA fall in the value of an asset below the amount shown in the books, recorded as a loss so that the asset is not overstated.
  • goodwillAn intangible asset that arises when a company buys another business for more than the fair value of its identifiable net assets.
  • GAAPGenerally Accepted Accounting Principles: the set of accounting rules used in a particular country, most often meaning US GAAP, set by the FASB.

More terms: Reporting Standards

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This page explains English vocabulary for learners. It is not financial advice.