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What is the difference between fair value and market value?
What i understand is that fair value is actually the market value but it could be different because it is price agreed between the seller and buyer and either the buyer negotiated the price which means it is going to be lower than the market value or seller has convinced the buyer to pay more for the asset than it actual market price?
For example the seller is ready to sell the asset for $100,000 but the buyer negotiated the price and seller agreed to accept $90,000 even though the marker price of the assets was $100,000?
Another scenario is that the seller has convinced the buyer for the potential benefits of the asset and buyer is willing to pay more for the asset to $120,000 even though the actual market price is $100,000?
Please correct me.
Hi,
IFRS 13 looks at the definition on fair value. If there is a market available where the item is traded then the available market price is the fair value. This is known as a level 1 fair value.
There are other levels depending on the type of market and if there isn’t a market available.
Thanks
I know that fair value has 3 basic criteria but my question is related to the difference between market value and fair value. I had a problem so I asked you a very specific example so I could know them.
Could you please elaborate your answer?
What i understand is that fair value is actually the market value but it could be different because it is price agreed between the seller and buyer and either the buyer negotiated the price which means it is going to be lower than the market value or seller has convinced the buyer to pay more for the asset than it actual market price?
For example the seller is ready to sell the asset for $100,000 but the buyer negotiated the price and seller agreed to accept $90,000 even though the marker price of the assets was $100,000?
Another scenario is that the seller has convinced the buyer for the potential benefits of the asset and buyer is willing to pay more for the asset to $120,000 even though the actual market price is $100,000?
Thank you.
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