The Research For The Selection Of The Investment Property Measurement Models In Chinese Listed Companies Under The New Standard

In recent year, the vast interesting has been placed on the application of fair value measurement by numerous international accountancy professions. International accounting standard permits entities to choose between fair value model and cost model for the investment property measurement. Once the measurement policy is chosen, it must be applied to all of an entity's investment properties. On February 15th, 2006, China's Ministry of Finance has promulgated the new accounting standard, which states the investment property should be separated from the fixed asset, for the first time investment property is recognized as a separate asset, and the asset fair value measurement is introduced, these movement is in line with the spirit of convergence of international accounting practices. In 2011, four years after the establishment of the new guidelines, a smooth transition for the new standard has been achieved. So far, how is the implementation of fair value measurement model in Chinese companies, especially in the case of listed companies, what are the impacts of the adoption of the fair value model on those companies? However, Currently Chinese companies in practice apply the historical cost model measurement as a basic valuation method; the new fair value model is still used with caution. What are the reasons for this phenomenon and which factors affect the choice of investment property measurement mode? Regarding above questions, this paper investigates the application of fair value model, under the new Chinese Enterprise Accounting Standard, which is used for the investment property recognition and measurement in listed companies. First of all, combining the normative research with case study, this paper illustrates the underlying concept of investment property valuation model, though the comparison between China's new accounting policy and International Accounting Standard, it also analyses the impact of the external factors, such as political effect, on the selection of investment property measurement model in Chinese listed companies. Furthermore, this paper studies the implications of newly implemented fair value model on many aspects of enterprise, such as accounting, financing and taxation, and therefore discusses the effects of the new valuation model in respect of the internal motivation. In the light of previous two analyses, this research reveals the crucial factors influencing the choice of valuation model for the investment property, especial those belong to the listed companies. Finally, though case study, the quantitative analysis is carried out about the impact on the listed companies from the choice of valuation model, therefore effectively verified the findings in previous research.