The Conceptual Study Of Current Value

The rising of the current value concept has its profound historical background and reality implications.Including future estimates in its measurement,the measurement feature of current value caused a sea change in financial reporting and became the most controversial topic in the past 20,30 years.The global financial crisis in 2008 even turned the spotlight on fair value.After reassessing the impact of fair value on the quality of financial information and the objective of financial reporting,IASB surprisedly insisted and expanded "future estimates" measurement application,and introduced the current value concept,parallel to historical cost,into the exposure draft of the Conceptual Framework.This initiative apparently reflects the decision made by IASB regarding measurement evolution.Along with the convergence of China Accounting Standard(CAS)and IFRS,inevitably our standard setters will encounter the same questions:should current value be included in CAS,and how?That is,what is the theoretical basis and application rules for inclusion of current value into accounting standards?Seemingly,it's only about inclusion of the current value concept.Indeed,the measurement principle behind the concept will affect accounting information evolution and the development of accounting theory in the next 10 years or more.By taking the chance of IASB seeking the public comments on the Exposure Draft of the Conceptual Framework,this paper finalized the conceptual enquiry on current value measurement concept(or "concept"),by using the work in the philosophy of language,to study accounting measurement features.Through descriptive enquiry.evaluative enquiry and prescriptive enquiry of current value,it concluded that:the measurement feature of current value-future estimates broke through traditional measurement concepts,reflects the information requirements from the new generation of the economy;on the other side,restricted by the current market environment,the standard setting objective-economic efficiency of resources allocation can be partially achieved on the condition that the appropriate evaluation and application rules of current value have been developed.The major conclusions are as follows:1.The key aspect of measurement issue is about measurement features.Focusing on the identified features-future estimates,the concept of current value can be articulated clearly.2.The concept of current value has room to be improved:the boundary of the definition is vague;the conceptual objective and valuation system do not exist,and the application rules of principal-concept nearly blank.3.based on the impact analysis of measurement feature on the accounting information quality,the evaluation system of qualitative characteristics of current value is consisted of relevance,faithful representation and prudence(tri-balance),that is,keeping the advantage of relevance,and selecting faithful representation and prudence to fulfill the objective of the standard setting and to reflect the restriction caused by the current market environment on the application.Once tri-balance evaluation requirements are met,the current value can improve the quality of accounting information.4.Based on the quality evaluation system,the application rules of principal-concept is articulated-prudential application of future estimates:the evaluating and reporting process of the "uncertainty" arising from future estimates in financial statements,covered the whole accounting process.The key points are:a.To clarify the boundary of inclusion of the uncertainty into financial reporting;b.To manage the inputs of valuation,which is the major source of measurement uncertainty,to differentiate performance reporting resulted by the measurement movement;c.To identify the key disclosure of uncertainty,then to provide the general,inclusive guidance for specific disclosures of sub-concepts.Through examining the case of prudential application-defined benefits plan,it concluded that by prudential application of future estimates,the value relevance and prudence level of information can be simultaneously improved.5.The study of measurement and performance reporting suggests input-based control model.This model differs from the major ones proposed,and mainly concentrates the application issues on principal-concept level,i.e.,based on the prudence principle,reflects the measurement result of input uncertainty into Other Comprehensive Income(OCI).By using this model,the earning impact of valuation uncertainty will be lessened;market restrictions on current value will be relieved,which is probably one of the efficient ways to mitigate the negative economic consequences of current value.