The Study Of Classification Of Financial Assets

Accounting for financial instruments is one of the most complex projects in the field of financial accounting. The International Accounting Standards Board (IASB) and America's Financial Accounting Standards Board (FASB) have been formulating and revising the relevant accounting standards, so as to minimize the complexity of accounting for financial instruments and comprehensively use fair value to measure the financial instruments. Under the pressure of the financial crisis, the IASB issued the International Financial Reporting Standards No. 9 (IFRS9) in November 2009 to replace the International Accounting Standard 39 (IAS39).In the same way, the FASB issued a proposed Accounting Standards Update (ASU) in May 2010.Both of them ordered to expand the scope of fair value used in accounting for financial instruments, and simplify the accounting for financial instruments.This paper researches on the classification of financial assets. Firstly, it analyses the IAS39's four classifications method, the IFRS9's two classifications method and the two classifications method of FASB's proposed ASU, explaining their foundation of classification, measurement attributes, reclassification, and treatment of hybrid financial contracts with an embedded derivative in detail. Secondly, it deeply compares the IAS39's four classifications method with IFRS9's two classifications method, the IFRS9's two classifications method with the two classifications method of FASB's proposed ASU, and the four classifications method with the two classifications method totally. Based on the comprehensive comparisons, conclusions are made that compared with four classifications method, two classifications method can minimize the complexity of accounting for financial instruments, and expand the scope of fair value used in financial instruments measurement. However, two classifications methods of both IASB and FASB are still products of mixed-measurement attribute model. They expand the scope of fair value used in measurement, but the comprehensive use of fair value still has a long way to go. In contrast, it is closer to the goal of comprehensively using fair value that the FASB makes the fair value as the default measurement attribute. Thirdly, it chooses 34 listed financial companies and 503 listed non-financial companies of our country as study sample, and describes the classification of financial assets of Chinese listed companies, and points out potential problems in classification of financial assets. Besides, it discusses the applicability of two classifications methods of both IFRS9 and FASB's proposed ASU in China. Finally, it makes some suggestions on the international convergence of accounting standards of China.