CBO Glossary
Fair Value Accounting
Fair-value accounting: A method of accounting for the value of assets and liabilities that is based on actual market prices in a well-functioning market or approximations of market prices when directly comparable figures are unavailable. Fair-value estimates for an asset or liability can be approximated by computing the present value of the projected cash flows using discount rates inferred from the observed market prices of assets or liabilities with comparable cash flow timing and risks. The discount rate reflects market participants’ appraisals of the market risks and other characteristics of the comparable assets or liabilities. See credit reform, discount rate, market risk, and present value.
Budget Counsel 