Derivative Financial Instruments, The Accounting Problems

The birth of derivative financial instruments (DFIs) has caused four problems in the field of accounting: (1) The impact on the traditional accounting elements theory. It is considered that the definition problem DFIs caused is hard to be contained in the frameworks of the traditional accounting elements theory. (2) Before the revision of the traditional accounting elements theory, there are theoretical limitations for the accounting recognition of DFIs. (3) The measurement attribute for DFIs is hard to select, and there are disputations for measurement modes. (4) Traditional financial disclosure can not present the risks of DFIs in time and fully.The improvement ideas in the dissertation are based on three preconditions: for accounting recognition, DFIs are brought into normal accounting process system; for management notion, risk measurement and disclosure of DFIs is emphasized specially; for technology means, advanced information technology provides accounting technology platform.In order to solve the above four problems some improvement ideas are put forward: (1) At first it is necessary to revise and extend accounting elements theory. This will help DFIs be contained in the normal accounting process system, then the recognition problem is solved. (2) On the condition that DFIs are contained in the accounting process system, the key is to solve accounting measurement problem. The dissertation intends to accept fair value as measurement attribute. But for the measurement mode, the dissertation doesn't support simple fair value mode with common sense, and also doesn't agree hedging accounting. The author believes that even the application of fair value and advanced financial report (such as real time report) is full, and something that cumbers decision exists in the accounting system stilly. After considering kinds of effect factors, two new measurement modes are discussed based on fair value accounting and advanced risk management technology, which specially consider accounting measurement, accounting presentation, and accounting control of DFIs risk. (3) In the end, some suggestions about financial report's improvement of DFIs are given.