FASB Codification The Definition Of Fair Value

(1)To begin, in the FASB Codification the definition of fair value is stated, “The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date” (FASB ASC 820-10-20). I found this explanation in the fair value measurement topic, under the overall subtopic, and in the glossary section. If I was to explain fair value to someone my example would be, if I purchased an asset (interest included) from you, the asset being a car, and you sell it at fair value, the price the market say its worth at the purchase date. This valuation can be found buy looking at the market of a similar product.

(2)Furthermore, while reading Fair Value Accounting from Theory to Practice, Dr. Campbell, Dr. Owens-Jackson, and Dr. Robinson touched on the disclosure of fair value. In chapters 2 and 3 we have worked on the worksheet in dealing with business acquisition, and acquiring assets and liabilities at fair value. The correct way to disclose fair value of assets at a

FASB ASC states, “The consideration transferred in a business combination shall be measured at fair value, which shall be calculated at the sum of the acquisition-date fair values of the assets transferred by the parent company, the liabilities incurred by the parent company to former owners of the subsidiary company, and the equity interest issued by the subsidiary company (FASB ASC 805-30-30-7). Consideration transferred can be classified as cash, other assets, common or preferred equity, options, warrants, and member interest of mutual entities. For example, if I acquire company B, I incurred all assets and liabilities at fair value. I also compare the fair value of net assets (assets less liabilities) to consideration transferred at fair value the excess is goodwill. I am the parent company and I acquired B the subsidiary