Fair Market Value

D

The correct answer is D. Exchange price.

Exchange price is the price in a hypothetical transaction that would occur in the market at the measurement date in which the reporting entity would transact for the asset or liability. It is also commonly referred to as fair value or market value.

Fair value is defined as 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. This definition assumes that the transaction is taking place in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market.

In determining the fair value of an asset or liability, various factors are considered, such as the nature of the asset or liability, the characteristics of the market in which it would be transacted, the level of market activity, and the availability of market data.

The exchange price is an important concept in financial reporting as it is used to determine the fair value of assets and liabilities in financial statements. The fair value measurement is often used in situations where historical cost accounting is not appropriate, such as when assets and liabilities are complex, difficult to value, or when market prices are subject to frequent fluctuations.

In summary, the exchange price is 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. It is an important concept in determining the fair value of assets and liabilities in financial reporting.