Describe fair value accounting and fair value measurement. Give examples of fair value accounting and measurement

Expert Solution

Fair Value accounting: Fair Value accounting refers to the mathod of accounting thats recording the Business transaction i.e. assets & liabilities on basis of fair market prices. Fair market price refers to the price at which goods & services & assets can be sold or liability can be settled in ordinary course of business. for example in case of the amalgation of one companies with others prices paid over and above net assets value is called goodwill thats calculate on basis of fair value accounting

Fair Value Meausrement: Fair Value measurement refers to the mathod of valuation of some assets & liabilities for which market price is not available. Fair value measuements has estimates the price of assets & liability for which it can be sold or transfer betweem unrelated persons and its depends the conditions & location of the assets.

Example if you have a car and want to sale the same than we can easilly measure the value of the car because there other alternative of same car available in the market.

ekkarill92 answered 2 years ago

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