Which definition best describes Fair Value?

Fair value is commonly 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 aligns well with the concept of adjusted cost new, as it considers the current utility of an item by reflecting current market conditions, demand, and potential uses.

When it comes to option A, it captures the essence of fair value by indicating that an item's adjusted cost new reflects its worth in the context of how it is currently utilized or valued in the marketplace. This concept recognizes that the price is not solely based on historical costs but adjusted to reflect the current conditions and expected uses of the item. It emphasizes the relevance and utility of the asset beyond mere acquisition price, which is essential in accurately determining its fair value.

The other options diverge from this standardized definition. For example, market price specifics might not provide a true reflection of fair value, especially in cases where an asset is overvalued or undervalued (as might be suggested in the second option). The third option focuses on depreciation, which could distort the market perception of value since depreciation does not always correlate with fair value assessments. Lastly, local authority assessments might vary significantly based on jurisdiction and may not reflect current