Market value is the estimated amount for which an asset or liability should be exchanged on the valuation date between
1) a willing seller 2) willing buyer 3) transactions at arm’s length 4) seller and buyer both are prudent and knowledgeable 5) no compulsion on either 6) sufficient advertising ie proper marketing is done
The estimated amount refers to a price expressed in terms of money payable for the asset
The transaction is presumed to be between unrelated parties, each acting independently
For advertising length of exposure time is not a, fixed period but will vary according to the type of asset and market conditions
Knowledgeable means both are reasonably informed about the nature and characteristics of the asset, its actual and potential uses, and the state of the market as of the valuation date
Prudence is assessed by referring to the state of the market at the valuation date, not with the benefit of hindsight at some later date
The prudent buyer and seller will act in accordance with the best market information available at the time
The market value of an asset will reflect its the highest and best use
The highest and best use is the use of an asset that maximizes it’s potential, legally permissible, and financially feasible
The highest and best use may be for the continuation of assets existing use or for some alternative better use
Market value does not reflect attributes of an asset that are of value to a specific owner or purchaser that are not available to other buyers in the market
The market value of assets will also have an impact on tax, especially those that experience depreciation or amortization
The market price is the price of an asset or product as determined by supply and demand
The market value represents what someone is, willing to pay for an asset
value is offered for on intrinsically worth
Market value provides a valuation that assumes settlement taking place on the date of the valuation
Fair market value is the price at which someone is willing to sell and someone is willing to buy
To determine assets fair market value, the best method is to compare the prices others have paid for something comparable
Fair market value is closely related to market value but if does not necessarily reflect the daily market value
Chartered Engineer