Principal market definition
/What is a Principal Market?
A principal market is that market having the greatest volume and activity level for the sale of certain assets or liabilities. The market from which a fair value is derived should be the principal market for an asset or liability, since the greater transaction volume associated with such a market should presumably result in the best prices for the seller. The market in which a business normally sells the asset type in question or settles liabilities is assumed to be the principal market, on the grounds that the organization has an incentive to use the market that produces the best prices for it. Thus, the designation of a principal market is from the perspective of the reporting entity; a different market might be the principal market for a competitor.
The price in the principal market that is used to measure fair value is not to be adjusted for transaction costs. However, the fair value derived in a principal market should be adjusted for the cost required to transport an asset from its current location to that market.