A wise buyer will buy an asset at equal to or lower than its fair value, and a wise seller will sell at a price equal to or higher than fair value.
The distinctions become more pronounced if what came under consideration was accounting value, or the worth of an asset according to financial records and the workings of generally accepted accounting principles. Theoretically, price should equal value, but since market efficiency is seldom a reality, if ever, in a transaction, buyers and sellers can exploit price and value inconsistencies to their benefit.
The IASB definition of fair value has been described as "substantially similar" to the FASB revised definition, which are both consistent with the measurement objective. (IASB Fair Value Measurement). Under this definition, the fair value of an asset is the amount at which that asset could be bought or sold in a transaction between willing parties, other than in a liquidation. ...Show more