what methods are used to determine fair value 
a market approach uses the prices associated with actual market transactions for similar assets to derive a fair value an income approach uses estimated future cash flows or earnings to determine the present value fair value a cost approach uses the estimated cost to replace an asset to help find an item s fair value 5the bottom linefair value is the estimated price at which an asset is bought or sold when both the buyer and seller freely agree on a price individuals and businesses may compare current market value growth potential and replacement cost to determine the fair value of an asset fair value calculations help investors make financial choices and fair value accounting practices determine the value of assets and liabilities based on current market value 