New standard: fair value refers to the price at which market participants can receive or transfer a liability when they sell an asset in an orderly transaction on the measurement date.
The new standard mainly adjusts the original definition of fair value from the following aspects.
First of all, it is obvious that fair value is the selling price. The hand price of an asset or liability reflects the expectation of market participants who hold the asset or assume the liability for the future cash inflow and outflow related to the asset or liability on the measurement date. Even if the enterprise intends to obtain cash inflow by using assets instead of selling assets, the price on hand can still reflect the expectation of obtaining cash flow by selling assets to market participants who will use the assets in the same way.
The second is to highlight the concept of market participants. In the original definition of fair value, "in a fair transaction, both parties who are familiar with the situation" are not clear enough. Therefore, the standard defines market participants as independent buyers and sellers who are familiar with assets or liabilities and are able and willing to trade assets or liabilities in the main market (or the most favorable market) of related assets or liabilities.
The third is to change the concept of debt "liquidation" to the concept of "transfer". The fair value measurement of related liabilities of enterprises should be based on the market, but when enterprises use their own resources to pay off their liabilities, they have certain advantages over the market. This comparative advantage of enterprises should be reflected in the liquidation process, not in the profit and loss before liquidation. In addition, the concept of transfer reflects the expectations of market participants on liquidity, uncertainty and other debt-related factors, while the concept of liquidation is not. It only considers the specific factors of enterprises. Therefore, the standard requires that the fair value of liabilities should be measured on the assumption that liabilities are transferred to other market participants.
Fourth, it is clear that asset sale or debt transfer occurs on the measurement date, not on other dates.