{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/820/10/#30-initial-measurement","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"820","topic_title":"Fair Value Measurement","subtopic":"820-10","subtopic_title":"Overall","section":{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"820-10-30-1","para":"30-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The fair value measurement framework, which applies at both initial and subsequent measurement if <a href=\"/glossary/f/#fair-value\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.\"><span>fair value</span></a> is required or permitted by other Topics, is discussed primarily in Section <a altsource=\"GUID-68DD360D-798B-4099-8DCA-20A31C9B238E.ditamap\" class=\"ditamap\">820-10-35</a>. This Section sets out additional guidance specific to applying the framework at initial measurement.</div></div>","snippet":"The fair value measurement framework, which applies at both initial and subsequent measurement if fair value is required or permitted by other Topics, is discussed primarily in Section 820-10-35. This Section sets out ad…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bb52f7d52eaef8ab26d189b2e7b23bf025bb6534770f59838894c8ad39c6d62b","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-2","para":"30-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C566E549-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">When an asset is acquired or a liability is assumed in an exchange transaction for that asset or liability, the transaction price is the price paid to acquire the asset or received to assume the liability (an <a href=\"/glossary/e/#entry-price\" class=\"term\" title=\"The price paid to acquire an asset or received to assume a liability in an exchange transaction.\"><span>entry price</span></a>). </span></span><span class=\"sfragment\" id=\"sfr_C566E678-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In contrast, the fair value of the asset or liability is the price that would be received to sell the asset or paid to transfer the liability (an <a href=\"/glossary/e/#exit-price\" class=\"term\" title=\"The price that would be received to sell an asset or paid to transfer a liability.\"><span>exit price</span></a>). </span></span><span class=\"sfragment\" id=\"sfr_C566E769-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Entities do not necessarily sell assets at the prices paid to acquire them. Similarly, entities do not necessarily transfer liabilities at the prices received to assume them. </span></span></div></div>","snippet":"When an asset is acquired or a liability is assumed in an exchange transaction for that asset or liability, the transaction price is the price paid to acquire the asset or received to assume the liability (an entry price…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ce576ddd19073920d92ade2dee09141f37a0e003dc4c31039d8388c49c534e37","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-3","para":"30-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C566E88E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In many cases, the transaction price will equal the </span></span><span class=\"sfragment\" id=\"sfr_C566E958-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">fair value (for example, that might be the case when on the transaction date the transaction to buy an asset takes place in the market in which the asset would be sold). </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><a href=\"/updates/asu-2011-04/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2011-04</a>.</div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><a href=\"/updates/asu-2011-04/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2011-04</a>.</div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><a href=\"/updates/asu-2011-04/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2011-04</a>.</div></li><li class=\"li-norm\"><span class=\"linum\">d</span><div class=\"p\"><a href=\"/updates/asu-2011-04/\" class=\"xref\">Subparagraph superseded by Accounting Standards Update No. 2011-04</a>.</div></li></ol></div></div>","snippet":"In many cases, the transaction price will equal the fair value (for example, that might be the case when on the transaction date the transaction to buy an asset takes place in the market in which the asset would be sold)…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7af5e517f6f4d8800bb2982d5d8f7c2392f5dec40d838e84faf9c9cb93669f75","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-3A","para":"30-3A","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C566EA46-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">When determining whether fair value at initial recognition equals the transaction price, a reporting entity shall take into account factors specific to the transaction and to the asset or liability. For example, the transaction price might not represent the fair value of an asset or a liability at initial recognition if any of the following conditions exist: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_C566EB1A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The transaction is between <a href=\"/glossary/r/#related-parties\" class=\"term\" title=\"Related parties include: Affiliates of the entity Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity Trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management Principal owners of the entity and members of their immediate families Management of the entity and members of their immediate families Other parties with which the entity may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.\"><span>related parties</span></a>, </span></span><span class=\"sfragment\" id=\"sfr_C566EBDF-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">although the price in a related party transaction may be used as an input into a fair value measurement if the reporting entity has evidence that the transaction was entered into at market terms. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_C566ECB4-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The transaction takes place under duress or the seller is forced to accept the price in the transaction. For example, that might be the case if the seller is experiencing financial difficulty. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_C566ED94-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The <a href=\"/glossary/u/#unit-of-account\" class=\"term\" title=\"The level at which an asset or a liability is aggregated or disaggregated in a Topic for recognition purposes.\"><span>unit of account</span></a> represented by the transaction price is different from the unit of account for the asset or liability measured at fair value. For example, that might be the case if the asset or liability measured at fair value is only one of the elements in the transaction (for example, in a <a href=\"/glossary/b/#business-combination\" class=\"term\" title=\"A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as true mergers or mergers of equals also are business combinations. See also Acquisition by a Not-for-Profit Entity.\"><span>business combination</span></a>), the transaction includes unstated rights and privileges that are measured separately, in accordance with another Topic, or the transaction price includes <a href=\"/glossary/t/#transaction-costs\" class=\"term\" title=\"The costs to sell an asset or transfer a liability in the principal (or most advantageous) market for the asset or liability that are directly attributable to the disposal of the asset or the transfer of the liability and meet both of the following criteria: They result directly from and are essential to that transaction. They would not have been incurred by the entity had the decision to sell the asset or transfer the liability not been made (similar to costs to sell, as defined in paragraph 360-10-35-38).\"><span>transaction costs</span></a>. </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">d</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_C566EE68-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The market in which the transaction takes place is different from the <a href=\"/glossary/p/#principal-market\" class=\"term\" title=\"The market with the greatest volume and level of activity for the asset or liability.\"><span>principal market</span></a> (or <a href=\"/glossary/m/#most-advantageous-market\" class=\"term\" title=\"The market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability, after taking into account transaction costs and transportation costs.\"><span>most advantageous market</span></a>). For example, those markets might be different if the reporting entity is a dealer that enters into transactions </span></span><span class=\"sfragment\" id=\"sfr_C566EF72-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">with customers in the retail market, but the principal (or most advantageous) market for the exit transaction is with other dealers in the <a href=\"/glossary/d/#dealer-market\" class=\"term\" title=\"A market in which dealers stand ready to trade (either buy or sell for their own account), thereby providing liquidity by using their capital to hold an inventory of the items for which they make a market. Typically, bid and ask prices (representing the price at which the dealer is willing to buy and the price at which the dealer is willing to sell, respectively) are more readily available than closing prices. Over-the-counter markets (for which prices are publicly reported by the National Association of Securities Dealers Automated Quotations systems or by OTC Markets Group Inc.) are dealer markets. For example, the market for U.S. Treasury securities is a dealer market. Dealer markets also exist for some other assets and liabilities, including other financial instruments, commodities, and physical assets (for example, used equipment).\"><span>dealer market</span></a>. </span></span></div></li></ol></div></div>","snippet":"When determining whether fair value at initial recognition equals the transaction price, a reporting entity shall take into account factors specific to the transaction and to the asset or liability. For example, the tran…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:092cac568674fec35fefdaad97098ed1c16545c48c5a51c0eccddb8cc2f2a24c","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-4","para":"30-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2011-04/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2011-04</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2011-04.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:286386293f360dc3883541cf6e55af60aa01b391fa3e6daa2e5f763c7570dd94","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-5","para":"30-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C566F065-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Paragraph <a href=\"/asc/820/10/#820-10-55-46\" class=\"xref\">820-10-55-46</a> illustrates situations in which the price in a transaction involving a derivative instrument might (and might not) equal the fair value of the instrument. </span></span></div></div>","snippet":"Paragraph 820-10-55-46 illustrates situations in which the price in a transaction involving a derivative instrument might (and might not) equal the fair value of the instrument.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:96929d8c6fae4056f7ed9f9e64ca51090c1d79baad928fc4615e1b40e6c23243","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}},{"citation":"820-10-30-6","para":"30-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_C566F12E-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If another Topic requires or permits a reporting entity to measure an asset or a liability initially at fair value and the transaction price differs from fair value, the reporting entity shall recognize the resulting gain or loss in earnings unless that Topic specifies otherwise.</span></span></div></div>","snippet":"If another Topic requires or permits a reporting entity to measure an asset or a liability initially at fair value and the transaction price differs from fair value, the reporting entity shall recognize the resulting gai…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3323a5be0a777fd9b7ffb061d9567f9bf6109f3fe7c4a51bd4f6ecba0e05ffb1","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482164","source_sha256":"78c59a25bca66350b190af4e4115f97c3689a17bf70001efffd15501f3e70c10"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6192d9fbd605b4a8a349ce317fdb131f1eab635faf714e3d566f059db41e399b","downloaded_from":"2026-09-10T01:43:25.090Z","last_downloaded_at":"2026-09-10T01:43:25.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not 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