Your Ask Joey ™ Answer

What is a market participant?

In order for an asset to be measured at fair value and for there to be an orderly transaction, there has to be a buyer and seller that can be considered a market participant. This is basically saying that buyers and sellers need to unbiased and acting in their own best interest.

If your parents offered to buy your house for 20% above market value, do you think that represents an orderly transaction? No, your parents would not be independent and may not be acting in their own best interest. The visual below outlines the definition of a market participant.


Back To All Questions

You might also be interested in...

  • Discontinued Operations on the FAR CPA Exam

    Overview of Discontinued Operations In financial reporting, discontinued operations refer to a component of a company’s core business or product line that have been divested or shut down. Discontinued operations will be reported (net of tax) separately from continuing operations on the income statement. The reason that discontinued operations are reported separately is so that...

  • Equity Method Excel Workbook

    If you would like to use the Excel workbook that was used to create the Universal CPA lecture on the equity method, please click the link below to download the Excel workbook: Equity Method Lecture Example https://youtu.be/QE4flnmuSkw

  • How Hard is the CPA Exam?

    So you’re thinking about taking the CPA exam? Whether you have a dream of becoming a tax advisor, feel as though you need public accounting experience, or just want to solidify your business acumen, the CPA license is one of the most prestigious and well respected licenses in the business world. The exam itself is...