Research On The Application Of Fair Value In Financial Instruments Accounting

The historical cost which is a main measurement attribute has played a huge role in the whole financial measures, but with the global economics’rapid develop, more and more new derivative trading tools appear, the capital market becomes more and more complicated, and financial instruments become diverse. A new measurement attributes-fair value arises at this historic moment, and gradually become popular among experts and practitioners. In order to adapt to the current economic situation and improve accounting information’s usefulness and reliability, theoretical and practical experts make greater effort to study the attribute of fair value.China published new Accounting Standards for Business Enterprises(ASBE) in February2006,one of its highlights which reflect the convergence between our accounting standards and international accounting standards, is reintroducing this measurement attributes of fair value. The application of fair value’s measurement attributes has far-reaching effects in improving accounting information’s relevance and reliability. But when it is applied into the concrete practice, its operability caused suspicion in both theoretical and practical cycles in various countries. Especially the global financial crisis in2008had put fair value on the top of the wave, different views about the application of fair value into the financial tool emerged. The author believes the fair value has undergone rigorous test in the financial crisis, although problems existing, its developing potential in the future cannot be ignored. Studying the current application of fair value in China is of crucial significance in improving the effective of the accounting information in China. Based on this the author write the paper involving the application of fair value in financial tool. The paper mainly discuss the current application of fair value in China from theoretical aspect as well as practical. in which the practical section choosing the annual financial report between2007and2011of16commercial banks in Shanghai and Shenzhen in China to making statistics. Reasons for choosing listed commercial banks as research object are as follows: first, using fair value to calculate significantly affects banking industry; second, as the most important intermediary credit organization, the operating performance of the banking industry affects the national economic profoundly. While the shadow of globe financial crisis has not faded thoroughly, study the current application of fair value in China and its trend in the future will play important role in reflecting the financial information of every trade.This paper includes six chapters:the first chapter is the introduction, which talks about the background of the paper and its meaning, and the relevant research in domestic and abroad are reviewed in this part. At the end of this part the research methods and contents of this paper are included. Chapter2is about the theoretical research of fair value. It talks about the following three aspects:the concept of fair value, fair value and accounting calculating and the calculating method of fair value, which gives a brief introduction of the fair value theory, and set a theoretical basis for the following practical research. Chapter3is about the current application of fair value in the financial tool accounting, which starts with theory, and introducing the relevant rules of fair value in financial tool accounting standard.The writer hope to boost the theoretical system and practical application of fair value measurement attributes through this paper, providing effective help to the application of fair value in financial instruments.