What is fair market value?

[devinluke]

I keep hearing the term fair market value in accounting and finance. What exactly does it mean, and how is it determined? Can someone share a simple explanation or example so I can clearly understand how fair market value works in real situations?

 

[Rick_Grimes]

Fair market value is the price an asset would sell for in an open market when both buyer and seller are willing and not under pressure.

 

[robertwilliam]

Fair Market Value (FMV) is the price at which an asset is sold on an open, competitive market wherein both the buyer and the seller act without compulsion, well-informed, and are acting on their own best interests.

 

[isabel]

Fair market value (FMV) is the price an asset would sell for in an open market between a willing buyer and seller, with no pressure on either side.
For example, If you’re selling a car and similar models in your area sell for ₹5,00,000, that’s roughly its fair market value. It’s usually determined by comparing recent sales, appraisals, or market demand.

 

[nikhilrajoria]

The asset would fetch in the open market, where the buyer and seller would make a free choice to part ways, and both would be reasonably known, and neither would be coerced to buy him or sell him.