A Study On Measurement Of Derivative Financial Instruments

The rapidly development of international financial market, along with the upgrade of the theory and practice of financial risks management, accelerate the innovation of financial instruments greatly. In order to satisfy the requirements of financing, enterprises deal with various derivative financial instruments more and more. But Accounting Standards can't keep up with the progress of financial derivatives, which lead to confusion in practice and lack of relevance and comparability in financial reports. Speeding up the development of the relevant Chinese accounting standards has the top priority, so as to supply the strong support to apply and supervise the derivative financial instruments. The author plans to make a discussion on the accounting measurement of derivative financial instruments. It will work as the foundation of establishing accounting standards, and then set a guideline for the practice of accounting measurement of financial derivatives.The thesis begins with the fundamental characteristics of derivatives, taking the theory of accounting measurement and practical condition into account, and put forward a viewpoint that most derivative financial instruments should be measured at their fair value, only a few of them should be measured at historical cost. Further more, we discuss how to acquire the fair value of derivatives in different instance and make a conclusion that measuring at fair value is operable. Finally, we analyze the actuality of accounting measurement of derivative financial instruments in our country, the result of field survey, the accounting procedure and financial reports of some banks, and we find that there are lots of difficulties in the course of applying fair value model, but they can be conquered. Financial corporations, who are the chief of derivatives users, are capable to measure derivative financial instruments at fair value. Therefore, it's a tendency to introduce International Accounting Standards and other foreign accounting standards, and apply the fair value model to measure derivative financial instruments.