The Construction Of Fair Value Financial Report Medol

Until now the development of financial report theory and model already has undergone more than one hundred years transformation, however, there are the intrinsic and the external two fundamental factors that affect the financial report transformation. The intrinsic factor is accountant's development, which is mainly effected by the accountant measurement attribute choice. The external factor is the social economy environment: On the one hand the financial report should uses the financial information to reflect the outside world, on the other hand the financial report builds up the connection channel between the enterprise and the outside world.Therefore the financial report model must conform to the social economy development requirement, and take certain measurement attribute as the fundamental. Beside that, to construct the financial report model also includes the financial report the quality information characteristic, the report content form as well as the report structure system. The traditional financial report is established on the historical cost measurement attribute foundation, which can satisfy certain period social economy needs. But when the new economical time arrival, the tradition financial report model already could not meet the objective needs, should be take placed by new report model. However, the new report model should first seek the new measurement attribute as the foundation, and this attribute, it is believed, is the fair value. What kind of shortcomings does the tradition financial report have? What improvement the fair value financial report brings comparing with the tradition financial report? How to construct the fair value financial report? What kind of problem does the new report bring? The purpose of author compose this article is just to solve them.This article contents four parts. The first part introduces the research background, the research significance, the research mentality and the research method. The other three main parts of contents are as follows:Part I: The measurement attribute and limitations of tradition financial report.The traditional financial report pattern takes the historical cost as the core measurement attribute. There are five kinds of accounting measurement attributes. The choice of history cost conforms to accountant's most basic requirement, also can satisfy the external social economy environment needs during a certain period. During the accounting's development history, the historical cost has experienced many challenges, but none of them can change its core status. The information quality of traditional financial report model emphasis the reliability, but has neglected the relevance, and affects timeliness, the materiality, and the comparability. The elements of financial report are the concrete application of financial report object. The elements of the traditional financial report manifests"the conception of history", there are also limitations in the definition of the elements of financial report as well as in the object choice. The traditional financial report system includes financial statement, balance sheets, income statement, cash flow statement and notes of financial statement.With the external environment fierce changing, the contradiction of historical cost financial report model has been totally intensified. The third technical revolution, bring the computer technology, the information technology and network tool; there appears the financial tool, the enterprise core driving influence also transformed from the hard assets to the soft assets. The traditional financial report already was unable to satisfy the needs of reflecting the economic environment, and transformation of financial report was extremely necessary. However, core problem of establishing the new report model is to choose the new measurement attribute, which, without any doubt, is the fair value.Part II: fair value measurement attribute and its utilization in financial reportFASB issued SFAS NO.157 in 2006, pointed out the definition of fair value is"Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date". The fair value measurement theory is the establishment on the economic theory. Fair is the fair value most main characteristic, which means seeking the maintenance of equilibrium point. Therefore the value determined by the market should be the most fair and just. The only goal of fair value measurement is to seek the market. How to seek the market and the balanced benefit is the problem which the fair and just value measurement may needs to solve.The fair and just value measurement attribute cannot isolate from the measurement attributes that are already exist. In the actual utilization the fair value displays through other measurement attributes. In SFAS NO.157, the fair value have into three ranks: the rank I refers to the market information,;the rank II refers to direct or the indirect market information that can be observed, but not inrank I; the rank III refers to property or debt information that can not be observed.In the financial report, the utilization of fair value measurement attribute may solve the problem of how to reasonably measure the financial tool, the human capital, the intangible asset and etc, which can't be satisfy under the historical cost. Part III: The construction of fair value financial report model.The construction method of fair value financial report model may profit from traditional financial report, the new financial report model is take the fair value measurement attribute as a foundation. the fair value financial report is take the relevance as a core qualitative information characteristics, but does not neglect the reliability. Besides satisfy the requirement of materiality, timeliness, comparability the fair and just value financial report information also needs to have the hierarchy characteristic.The fair value method will classify the accounting measurement information into the market information, the similar market information and simulates market information three hierarchies. These three levels manifest the progressive from market objectively judgment to the enterprise subjective judgment, and more subjective judgment need more evidence provide in the financial report disclosure.The definition of the fair value financial report element essential should base on"the future income view"foundation. The fair value financial report including the balance sheet, the comprehensive income sheet and the financial statement notes, those should reflect the enterprise's value, and change enterprise value. The balance sheet needs to realize the re-estimated value as fair value changes, which should be disclosed as equity in balance sheet. The comprehensive income sheet reflects all the enterprise equity change, including traditional profit as well as re-estimated value.The to construct the fair value financial report also needs to consider some other related questions. The timeless of the report play an important role, The report implementation must take the modern information technology and the networking as a platform, moreover, supervising the fair value financial report to also has different request.