Research On Issues About Fair Value Hierarchy And Its Inputs

As a big step forward in the development of the fair value measurement theoryand method, the fair value hierarchy and its inputs theory and method are core issuesof how to make good use of fair value, so they are of great theoretical value andpractical significance. U.S. Financial Accounting Standards Board (FASB),International Accounting Standards Board (IASB) and China’s Ministry of Finance allregard the fair value hierarchy and its inputs as important parts of the fair valuemeasurement standard, but the related guidance is very fragmented and rough, manydetails are not involved, which brings numerous difficulties to the implementation ofthe fair value measurement standard. Therefore, it is pressing to conduct acomprehensive and in-depth research on the fair value hierarchy and its inputs.This paper analyzes similarities and differences of the fair value hierarchy andits inputs in the Topic820, IFRS13and China’s accounting standards, on the basis ofwhich this paper deducts the logical context of the fair value hierarchy and its inputs,This paper concludes that the fair value hierarchy and its inputs establish amarket-based framework of fair value measurements and disclosures, and are specifictheories and methods in the process of fair value measurements. This papersummarizes the points in the classification and determination of the fair valuehierarchy as well as the principles to identify all levels of inputs, explores theapplication of each level inputs, which would help to improve and enrich the contextsof the fair value measurement standard. In addition, this article an alyzes theapplication of the fair value hierarchy and its inputs in China, concludes that we needuse the Level2inputs and Level3inputs to estimate the fair value more often, andoffers the corresponding suggestions for the difficulties that exist in the application.The innovation of this paper is to summarize the five theoretical basis of the fairvalue hierarchy and its input firstly, and deduct the logic context of the fair valuehierarchy and its inputs based on fair value measurement standard, de monstrate thetheoretical significance of the fair value hierarchy and its inputs. The research on thefair value hierarchy and its inputs in this paper can help to perfect the fair valueaccounting standard in our country, and promote the comprehensive and proper use ofthe fair value.