Which value represents the amount an asset could be sold for in an open market?

Which value represents the amount an asset could be sold for in an open market?

• A. Replacement cost
• B. Unfair market value
• C. Fair market value
• D. Salvage value

Answer: (C)

Fair market value is the price at which an asset would sell in an open market between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts and not acting under compulsion. This is the standard reference used in appraisals, lending, and financial reporting to reflect what the asset would realistically fetch today in a normal market. Replacement cost looks at how much it would cost to replace the asset with a similar one, not the sale price; salvage value is the expected net recovery from the asset at end of life, not its current market sale price; unfair market value isn’t a recognized term in standard practice. So the amount an asset could be sold for in an open market is fair market value.

Fair market value is the price at which an asset would sell in an open market between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts and not acting under compulsion. This is the standard reference used in appraisals, lending, and financial reporting to reflect what the asset would realistically fetch today in a normal market. Replacement cost looks at how much it would cost to replace the asset with a similar one, not the sale price; salvage value is the expected net recovery from the asset at end of life, not its current market sale price; unfair market value isn’t a recognized term in standard practice. So the amount an asset could be sold for in an open market is fair market value.