BPA Advanced Accounting Practice Test 2026 - Free Advanced Accounting Practice Questions and Study Guide

The term that describes the value of an asset determined by tax authorities for tax calculation purposes is assessed value. This value is used by local governments to calculate property taxes and is typically established by an assessment process which considers various factors, including the property’s location, size, and improvements made to it.

Assessed value is distinct from other valuation concepts because it is specifically geared towards taxation rather than reflecting a price that could be obtained in an open market transaction, as with market value or fair value. Market value refers to the current price at which an asset would trade in a competitive auction environment, while fair value considers the price that would be agreed upon between knowledgeable, willing parties in an arm's-length transaction.

In essence, assessed value serves a specific function within the tax system, enabling governments to levy appropriate taxes based on the value of properties within their jurisdiction. This valuation can also differ from the asset value, which is a more generic term and does not have the specific connotations of tax assessment.