In accounting, fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset. The derivation takes into account such objective factors as the costs associated with production or replacement, market conditions and matters of supply and demand. Subjective factors may also be considered such as the risk characteristics, the cost of and return on capital, and individually perceived utility.
>>>PUT SHARE BUTTONS HERE<<<
In this Dossier
Fair value in the context of Market value
Market value or OMV (open market valuation) is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and differ in some circumstances.
Fair value in the context of Depreciation
In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).
Depreciation is thus the decrease in the value of assets and the method used to reallocate, or "write down" the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes. The decrease in value of the asset affects the balance sheet of a business or entity, and the method of depreciating the asset, accounting-wise, affects the net income, and thus the income statement that they report. Generally, the cost is allocated as depreciation expense among the periods in which the asset is expected to be used.
Fair value in the context of List of UK universities by endowment
The following is a list of British universities ordered by their financial endowments, expressed in pounds sterling at fair value.
British charity funds are made up of restricted reserves, which can only be used for specific purposes, and unrestricted reserves, which could be used for any activity within the charity's scope. The statement of recommended practice (SORP) defines endowments as specific funds with both restrictions over the endowments' income and intention from the donors to establish such endowments. In addition, these reserves must either be held indefinitely and cannot be converted into income without permission (known as permanent endowment funds) or could be converted into income at trustees' discretion (known as expendable endowment). Updated SORP guidance published in 2007 prohibits donations with no specific purpose by the donor (unrestricted) and "with no requirement for maintenance of the original capital" from being treated as endowment. While restrictive funds are not considered endowments under the SORP's accounting guidance, institutions sometimes use the term "endowments" broadly to refer to the sum of all funds that generate income for the institution's operation and activities. Figures listed below account for funds defined by the SORP as endowment.