It stands for fair market value; the price at which an asset or service is paid by a willing buyer to a willing seller under normal markets conditions. For a liability, it is the amount at which it is incurred (assumed) or settled (transferred) in a current transaction between willing and reasonably knowledgeable parties under normal market conditions. Both the buyer and seller are assumed to be rational and have a reasonable knowledge of relevant facts and particulars of the transaction (the so-called arm’s length transaction). Both the seller and buyer are neither forced nor under any compulsion to transact at depressed or exaggerated prices (prices other than what the market fairly assigns to an asset or liability, etc.)

Fair market value is a measure of how much an item is worth based on the price a buyer is willing to pay (offer price) and the price a seller is willing to accept (ask price). It reflects the price an asset / liability (or generally a business) would have in a transaction between a buyer and seller who are each aware of market and transactional conditions and under no duress to sell or buy.