The fair value of an asset is more reliable where there exists a liquid market for the asset, than when no liquid market exists.

Question

Quizplus · Accepted Answer

The fair value of an asset is generally more reliable when there is a liquid market for the asset, as it provides a more objective and observable measure of the asset's value, based on the price at which it could be bought or sold in an active market. When no liquid market exists, fair value may need to be estimated using less objective methods, such as discounted cash flows or valuation models, which may be more subject to judgment and uncertainty.

The Fair Value of an Asset Is More Reliable Where