Research On The Application Of The Fair Value

Measurement is the core of accounting.With the rapid development of knowledge-based economy and information-based society,the book value of economic resources of individual Accounting has seriously deviated from the market value,especially with the continuous emergence of financial derivatives make it more difficult for historical cost measurement to cope with the situation;the fair value is rapidly becoming the measurement methods of all derivative methods for its good relevance of decision-making.2001 International Accounting Standards Committee IASC issued a detailed specific" the presentation of present value",this is a breakthrough in the problem of the use of fair value measurement of the present value,this has greatly accelerated the use of fair value in theory and practice.The international application of fair value has been "the phase of or use" into "the stage of how to use,how to make good use of it".In the environment of international economic and trade exchanges became more frequent and accounting standards international converge,the comprehensive application of fair value has been the general trend.However,in practice,the problems and resistance that fair value exposure make fair value a problem in today's accounting world,countries are stepping up research in this area.We introduce fair value cautiously in the new Accounting Standard,this is because China's capital markets are imperfect,system standards are not perfect,information is opaque, theoretical research on fair value is not mature at present,this makes the issue of fair value even more significance.This article points out theory defects and application difficulties through in-depth study on the definition of fair value and the theoretical basis for measurement on the one hand and through the analysis of application of the status quo at home and abroad on the other hand.First of all,the text gives an explanation on the definition and measurable attributes of fair value including the definition and essential character of fair value as well as the definition of fair value measurement attribute and measurement and recognition methods,it provide theoretical support for subsequent problem.As can be seen from the analysis,although the expression of fair value in various countries' accounting standards are inconsistent,but almost all include the following points: fair transactions,the compatibility of the market,recognized sexual of the value,comprehensive measurement,after further analysis,it comes to the essential characteristics of fair value:1.market evaluation;2.the decision-making relevance;3.the present tense concept;4.subjective estimate5.hypothetical transactions.Manifestations of the fair value cover the market value,replacement cost,net realizable value and present value or historical cost.The measurement of fair value is usually divided into three levels based on the existence of active market price.Its measurement methods includes the market price and valuation,the valuation method is often take advantage of the present value of discounted to carried out.Based on the first two chapters,we first analyze the necessity of fair value measurements in chapter three,and then analyze the reasons for these differences by comparing the differences in the use of fair value at home and abroad,we have reached a conclusion from that:the use of fair value is a inevitable global trend,but the current use of fair value in our country is cautious and selective introduction.And the applications in the world is not perfect,the sub-loan crisis last year are good examples.The fourth chapter study the theoretical defects and difficulties in practice of fair value. Theoretical defects is mainly embodied in the essence of fair value and position,difficulties in practice focused on two-point,that is problems on reliability,operability(earnings management and the volatility of operating results).Finally,we propose several suggestions about the use of fair value in our country, including:the first one is improve the theoretical basis of fair value,fair value is clearly a step forward compared to historical cost,but its theory is lag because its valuation of technology and reliability issues have not been properly resolved.However,with the continuous improvement of valuation techniques,Accounting can come up with fair value valuation model that it is able to track the market;the second one is to improve macro-environment,here we should grasp the "degree" of reliability,the problem of fair value's reliability lies mainly in the lack of verifiable——because it will involve subjective estimates and judgments,so accounting standards can ensure the reliability of fair value through providing a more stringent standard.At the same time we need to strengthen the third-party valuation,establish a sound market assessment system and database,establish unified and fully competitive various types of transactions'market system,strengthen the supervision of enterprises and markets,and unify measurement standards of accounting and auditing in order to improve the operability;finally,we should regulate the main enterprises, avoid earnings management,the method proposed is use different ppropriate measurement techniques according todifferent measurement item's nature,at the same time,we should increase information of estimated the risk,defuse the volatility of operating results,improve the corporate governance structure and improve the quality of accounting personnel.