Study On The Comparison Of Fair Value And Its Application

Historical cost has been the main measurement mode, for a long time, but with the development of economy especially lots of derivative financial instruments come forth, it is difficult for historical cost to cope with the situation gradually and its drawbacks are gradually exposed out. At this time, unique characteristics of the fair value appeared in front of people, and have gained widespread community concern. Compared with historical cost, fair value is more accurate message reflecting the value of the assets or liabilities; it, provides more timely and relevant information for the users, especially derivative financial instruments and performance is particularly conspicuous. Despite resistance, the application of fair value at domestic and abroad has been continuously expanded into the measurements which are from the financial tools gradually extended to other non-financial assets or liabilities. From an international viewpoint, comprehensive application of fair value is the trend of the times. Our country lags behind in the application of fair value both in theory and in practicality, and has a series of frustrations. But with China's rapid economic development and faster internationalization, comprehensive application of fair value will become an irreversible trend in our country.Based on the domestic and international researches about application of fair value, this issue summarizes the definition of fair value, measurement attributes, characters and the levels of measurement; then it analyzes basis of the theory which is a solid support of the application of the fair value. The article's methods focused on using induction, classification analysis, and comparative analysis research methods. I respectively generalize the using of fair value on financial instruments and non-financial tools applications by IASC, FASB and China. Finally, through analyzing and contrasting similarities and differences by IASC, FASB and China in fair value of the analysis concluded, I raise the personal recommendations about application of the fair value in China. These innovations are: (1) a comprehensive exposition about fair value measurement attribute; (2) comparative analysis of the application of fair value by international, the United States and China tripartite; (3) personal recommendations for the application of fair value in China.