It is the meaning to which experts turn in most circumstances, but other, more specific meanings of fair market value are used in certain industries and when particular circumstances dictate. For instance, take a leveraged buyout situation. Two subcategories of the fair market value concept fair market value in continued use and fair market value in alternate use can help you better understand the fair market value concept. Fair market value in continued use assumes the property being valued will be used for the purpose for which it was designed and built, or to which it is adapted. This interpretation usually is applied to a group of assets or to a property that is an integral part of an ongoing concern.
Experts typically use it for tax purposes.
They formulate it using a cost approach. The property should have significant remaining useful life. The property should be managed competently. Use of the property in an alternate manner should not be economically feasible. Continuation of the property s existing use should be viewed by the current or future owners as practical.