What is the difference between book and fair value ?

Question

Accepted Answer

Book value is the value of an asset as recorded on a company's balance sheet, while fair value is the estimated value of an asset based on market conditions.

Book value is based on historical cost and depreciation, while fair value is based on current market conditions.
Book value is used for accounting purposes, while fair value is used for investment and valuation purposes.
Book value may not reflect the true market value of an asset, while fair value aims to provide a more accurate representation of value.
Example: A company's machinery may have a book value of $10,000 based on its original cost and accumulated depreciation, but its fair value may be $15,000 based on current market prices.

What is the difference between book and fair value ?

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