Fair value is the amount for which an asset could be exchanged OR a liability settled between knowledgeable, willing parties in an arm’s length transaction.
Arm’s length transaction-
An arm’s-length transaction is a transaction between two parties who have a personal or family relationship. The transaction is kept separate (at arm’s-length) from their personal relationship. An arm’s-length transaction can be used to avoid the appearance of a conflict of interest or to keep the relationship “business-like” so the personal relationship is not affected.
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