Fair Value is an accounting and financial term used to describe the accurate measurement of the value of an asset, liability, or equity at a specific point in time. It is based on what two well-informed and willing parties would agree upon in a transaction. Fair Value is recognized as representing the most accurate and unbiased representation of value, especially compared to historical cost or book value.

In practice, Fair Value can be derived from various inputs, categorically classified into three levels: Level 1 inputs which are observable market prices for identical items, Level 2 inputs which involve other observable inputs like similar assets or market conditions, and Level 3 inputs, which are unobservable and often rely on assumptions or expert valuation. For example, the fair value of a traded stock can often be its current market price, while the fair value of a piece of specialized equipment might require appraisal.

Easy Month End can use the concept of Fair Value in helping entities with their financial reporting requirements such as balance sheet reconciliations. For example, reconciling the fair values of assets and liabilities in reports is crucial to presenting accurate and reliable financial information.