Question

How do I know the fair value of an asset and what is the difference between the fair value of the assets and the book value , give me an example?

Answer 1

The fair value of the property is possibly determined by the market. The buyer and seller willing at such time agrees. In other words, the carrying value is usually the equity, and the book value is the current price.

Fair value: The fair and equilibrium estimate of the value of the underlying asset is fair value. Depending on a number of occasions, such as infrastructure, fair value of the asset, its associated costs, and summarizing stocks and demand. Definition of fair value is the value of the proceeds from the sale of a property or the value placed on it to make a transaction between people in the market at the time of measurement.

Generally, estimating the fair value of a property is a simple complication. Determining the fair value of a property is generally guided by accounting standards. The IFRS and US GAAP provide guidance on how to extract the fair value of the property.

Book value: The book value of the entire asset is equal to the carrying value as recorded on the balance sheet, and companies will look for assets that are against the accumulated depreciation. The book value is also likely to be considered as net asset value in a company with purely intangible assets and liabilities. The initial cost of investing can be either book value or full cost. e.g. Merchant expenses, taxes, and services, etc.

In accounting, book value is considered to be one of the most important concepts. The earliest book value is the value of the assets listed on the company's balance sheet. Equity for stockholders is calculated as 'difference in value of assets', the book value is used to determine the equity value of the property to the shareholders of the business.