ThomasM125
Expert Alumni

Business & farm

Normally, the value of an asset would decrease over time and that is why you deduct depreciation, to account for the decrease in value. So, the fair market value may approximate the cost of the asset less depreciation taken on it, but it is not an exact science, so the fair market value can be different from the cost less depreciation. The fair market value would be what you could sell the asset for in the open market.  

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