The Research On Fair Value By The Financial Crisis

In the last years, with the development of economic social, for satisfying the information users' need the fair value is gradually replacing the historical cost. The newly issued Accounting Standard for Business Enterprises has 38 basic standards, in which about 22 basic standards involve in the fair value. Meantime accounting field paid more and more attention on researches of fair value, and has achieved remarkable results. Under the financial crisis, there are more and more people doubt that fair value is unreasonable. October 1, 2008 more than sixty American councilmen request the American's Securities Regulatory Commission for suspending the use of fair value. On October 3, House of Representatives published the Emergency Economic Stabilization Act of 2008, in which section 132 restates the Securities and Exchange Commission's authority to suspend the application of Statement Number 157 of the Financial Accounting Standards Board if the SEC determines that it is in the public interest and protects investors. However,IASB and FASB believe that the low level standard credit and shortage of management is the major cause. But the fair value can reveal the truth of non-performing asset timely which can help the investor and financial institution resolve the financial crisis effectively.Under this background,this paper use the achievement of predecessor and the concept of fair value to analyse the important of the fair value in the Subprime Mortgage Crisis and the Financial Crisis. Then evaluate the fair value's advantage and disadvantage. In the last, author will give some advices for the fair value application.