The Demo Site

Fair value, also called fair price (in a commonplace conflation of the two distinct concepts), is a concept used in finance and economics, defined as a rational and unbiased estimate of the potential market price of a good, service, or asset, taking into account such objective factors as:
* acquisition/production/distribution costs, replacement costs, or costs of close substitutes
* actual utility at a given level of development of social productive capability
* supply vs. demand

and subjective factors such as
* risk characteristics
* cost of capital
* individually perceived utility

Differences between the definitions of fair value in SFAS 157 and in IFRSs
SFAS 157 defines fair value as ‘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
IFRSs defined as ‘the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction’
(with some slight variations in wording in different standards).

The difference set in 3 ways
* SFAS is explicitly an exit (selling) price, IFRSs is neither explicitly an exit price nor an entry (buying) price
* SFAS 157 explicitly refers to market participants. The definition in IFRSs refers to knowledgeable, willing parties in an arm’s length transaction
* For liabilities, the definition of fair value in SFAS 157 rests on the notion that the liability is transferred (the liability to the counterparty continues; it is not settled with the counterparty). The definition in IFRSs refers to the amount at which a liability could be settled between knowledgeable, willing parties in an arm’s length transaction

The developments included the deferral of the effective date of SFAS 157 for non-recurring measurements (for example in business combinations). It was noted that these developments would have no impact on the IASB project on fair value measurements.
* Assets:
o Current entry price: The price that would be paid to buy an asset in an orderly transaction between market participants at the measurement date.
o Current exit price: The price that would be received to sell an asset in an orderly transaction between market participants at the measurement date.
* Liabilities:
o Current entry price: The price that would be received to incur a liability in an orderly transaction between market participants at the measurement date.
o Current exit price I (transfer notion): The price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date.
o Current exit price II (settlement notion): The price that would be paid to settle a liability in an orderly transaction at the measurement date.

For detail information my learning source IAS Plus