fair market value

finance

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Last updated

July 17, 2026

Quick Summary

Fair market value refers to the price at which buyers and sellers, who are knowledgeable about the relevant facts and not under duress, are willing to transact. This value is determined by what assets are worth to their owners, representing the maximum price a company would pay for an asset based on expected future cash inflows.12

However, fair market value is distinct from an asset's value to the company itself. Companies typically retain assets only if their present value to the owner exceeds their market value, indicating that the asset is worth more to the company than it would be to an outside buyer.2

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accounting
Asset value
…assets; this is known as fair market value. This sale price is seldom a good measure of the assets’ value to the company, however, because few companies are likely to keep many assets that are worth no more to the company than their market value. Continued ownership of an asset…
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…assets; this is known as fair market value. This sale price is seldom a good measure of the assets’ value to the company, however, because few companies are likely to keep many assets that are worth no more to the company than their market value. Continued ownership of an asset…
Read More