What is "fair value"?ASC 820 (Formerly 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."

The first part of this definition states that the market data considered should be based on an orderly transaction and not a forced transaction. This is a key consideration in mark to market accounting because of the variance in value found between the two types of transactions. An orderly transaction, by the very nature of the negotiation and extended marketing period, generally yields a higher price than a forced transaction. A forced transaction usually occurs in a public auction and results in assets being sold to the highest bidder without negotiation and at lower prices.

ASC 820 (Formerly SFAS 157) requires that mark to market valuations must indicate which "level" of information was available and utilized in arriving at the fair value conclusion. Level One uses quoted prices that are not adjusted, in an active market for an identical asset or liability. The second level relies on other observable transactions, other than quoted prices, for the assets or liabilities. Sometimes, the assets or liabilities under consideration in mark to market valuations are not publicly or heavily traded. In these instances, the calculation can be more complex and relies heavily on Level Three assumptions, where certain assumptions about the future cash flows of the assets are made.

Backed by the world's largest database of transaction information, AccuVal’s appraisers are well-equipped with the current market data necessary to support mark to market compliance requirements. Our reports can be relied upon because they are backed by information gathered from the industry's top data resources and analysis is conducted by experienced, independent and certified appraisers.