Fair value measurement objective

ASC 820-10-35-2 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This is an exit-price objective. It is not historical cost, a forced-sale amount, or the price management wants.

Define the question before estimating the amount

Another Topic must first require or permit fair value. Preserve that Topic's scope, unit of account, and accounting for later changes. Then record the asset or liability, measurement date, and characteristics that market participants would consider. ASC 820-10-35-2B requires the entity to consider relevant characteristics of the item, such as its condition, location, or a restriction that is an attribute of the item.

The entity's plan to hold an asset does not change the exit-price objective. The measurement uses assumptions that market participants would use when pricing the item under current market conditions.

Keep the conclusion bounded

A supported conclusion states what is measured, when it is measured, which market-participant assumptions apply, and which evidence remains unresolved. It also names the Topic that required or permitted fair value. ASC 820 explains the measurement; it does not decide the recognition or reporting location that another Topic controls.