Orderly transaction definition

What is an Orderly Transaction?

An orderly transaction is a monetary business event for which there has been a sufficient amount of time to engage in normal marketing activities to inform the parties adequately about the transaction. Conversely, it is not a forced transaction, such as a bankruptcy sale, where the resulting prices tend to be much lower. An orderly transaction is needed in order to arrive at the fair value of an asset or liability.

Example of an Orderly Transaction

Mark wants to sell a rare painting that has been in his family’s possession for many years. To do so, he contacts a major art auction house which appraises it, lists it in a brochure for an upcoming scheduled auction, and then sells it to the highest bidder. Conversely, the arrangement would not have been orderly if Mark had simply sold the painting to an acquaintance after a brief discussion regarding the merits of the painting.

Related AccountingTools Course

Fair Value Accounting