Definicja fair value surplus

Co znaczy FAIR VALUE SURPLUS:

With regards to balance sheet items of an investee unit, this is the positive difference between the fair market value and the book value of the item as of the date of consolidation. This is true when the book value is:

Lower (when the item is an asset item); or Higher (when the item is a liability item)

A fair value surplus is also referred to as a fair value difference, but this can also encompass fair value deficits. Other general terms are:

Excess of fair value over book value Excess of cost over book value (when the equity method is applied) Hidden reserve (used in Europe)

When the difference between the fair value and book value is negative, this is referred to as a fair value deficit (or hidden contingency - the European term).

Fair value surpluses can result from

Undervaluations of assets Assets or liabilities that are not yet capitalized (but could be) Refraining from writeups (that would be possible) Overvaluations of liabilities

You have the option to eliminate fair value differences during the course of consolidation.