Simple English definitions for legal terms
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The fair-value accounting method is a way of valuing assets based on their current market value. This method is used to determine the value of assets such as stocks, bonds, and real estate. It is different from other accounting methods that use historical cost or other methods to determine the value of assets.
For example, if a company owns a piece of real estate, the fair-value accounting method would determine the value of that property based on its current market value. This could be different from the price the company paid for the property or the value of the property on the company's balance sheet.
The fair-value accounting method is used to provide a more accurate picture of a company's financial position. It is often used by investors and analysts to evaluate a company's performance and potential for growth.