Fair value accounting | Finance & Capital Markets | Khan Academy

Difference between Historical Cost and Fair Value Accounting. Created by Sal Khan.

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[CyclingHudson]

2:05
Fair value is a broad measure of an asset's worth and is not the same as market value, which refers to the price of an asset in the marketplace. In accounting, fair value is a reference to the estimated worth of a company's assets and liabilities that are listed on a company's financial statement.

[stockglasses]

Thank you - after watching several videos on fair value I don't know why it seems to difficult to explain for some people. Appreciate the clear video and lesson.

[narutodssunny]

Thank you for explaining this in plain English.

[mnemaia]

team khan academy! you guys are just the bomb.

[natnaelbeede]

Easy example supported by a GREAT explanation THANKS

[himalghale]

You can in normal sense take fair value as market value.
But it’s not about typical market value. It’s more than just market value.

[josephk]

Fundamentally the FV accounting method is a much more precise gauge on the viability of a business because any purchase is just a snap shot in time of value not accurately representing present market conditions

The difference between the "old ways" and FV aside from the technicals which clearly favor FV is that the modern methods are occurring with a much less stable currency with a market under greater manipulation. Don't blame the tools of measurement when what were measuring crazy

[AppleOceanus]

For those captivated by this content, this book is the next logical deep dive. "Game Theory and the Pursuit of Algorithmic Fairness" by Jack Frostwell

[ziphomadolwana]

Mr Khan How come you know everything. You answers for everything. Thanks for the video, very helpful

[mohammedomar]

Pretty simple, but gets very complicated when there are a lot of assets to consider

[robinduong]

Sounds hilarious at 2x speed. Here for accounting lectures!

[bradmonk]

liked this video based on the thought of a guy going around, looking at and valuing sheep as a full time job. I imagine his name would be something like Keith.

[davida]

Is Fair Value the same as Fair Market Value? Also what other methods or means are used to calculate the FMV?

[Melki]

can I put historical cost and then put the difference from the fair value in some kind of secondary or sub account?

[beatsbyjohng]

so does "historical value" = "book value" ??

[evanmarcus]

Is there anything you don't know Mr Kahn???

[haretztj]

man if i were to have been in that sheep guy's shoes, I probably wouldn't be here learning and enjoying being rich

[jatinsingh]

But Sal, the GAAPs say the historical cost should only be recorded

[jimbrown]

this was a good explanation, but not relevant in 2022, when we've learnt that there is an overabundance of sheep and they're all worthless.