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Fair-value

Fair-value

Fair Value



Definition of Fair Value


Fair value is a term used in accounting for the actual price that the buyer and seller arrive at, when negotiating the sale of an asset. This is in contrast to carrying value, also called book value, which is the price of the asset as it reflects in the balance sheet of the company. For example, when purchasing a used car, person A begins negotiating with the car dealer at a price of INR 6,50,000, and eventually settle on a price of INR 8,00,000. Here, the fair price will be considered INR 8,00,000.


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