Research Of Derivative Financial Instruments' Accounting Recognition

In the 1980's financial risks has increased rapidly. New financial instruments emerged in an endless stream on the international financial market. A large number of derivative financial instruments emerged as the result. As it were, derivative financial instruments also contained huge risk meanwhile it can spread risk and reduce the cost of capital. In recent years, so many companies bankrupted because of the transactions with derivative financial instruments. Under the tragedy, the whole society lay their attention more and more on the responsibility of accounting. Some criticized the CPA firms the others criticized the accounting standards. Virtually, all the disputed about the derivative financial instruments were the disputes about the basics of Conceptual Structure of Financial Accounting. So how to settle the challenge to traditional accounting recognition and how to develop the new theory to disclosure the proceeds and risks by using derivative financial instruments in the financial statement has been a hot wordwide issue.In this topic, I am trying to discuss some accounting problems and difficulties about derivative financial instruments, mainly from the aspects of recognition. By consulting the rules in IASC and FASB, comparing the difference between international and national accounting recognition in derivative financial instruments, I believe that derivative financial instruments should be measured by"Fair Value"in the aspect of recognition. I bring some modified minds of recognition about the Accounting Standards for Business Enterprises which ministry of finance launched in Feb.15.2006. In this essay, I believe that there are some biggish diversity between the newly released standard and accounting system, so the international experience should be deeply researched with combined our national circs to complete standard system on derivative financial instruments in our country. The system environment of derivative financial instruments frames should be strengthened,our Conceptual Structure of Financial Accounting should be constructed, the making of accounting personnel should be advanced to build our country theory of derivative financial instruments and direction practice work.