A Study On Fair Value Applications Of Listed Companies

With the increasing trend of global economic integration, international accounting standards and systems reach a consensus for the sake of satisfying the requirements of international trade. Being a member of WTO, China also accelerated the pace of convergence with international accounting standards during recent years. In February15th2006, the Ministry of Finance issued fundamental principles and related concrete principles, application guidelines and interpretations on accounting standards which enforced all listed companies to carry out the new standards accordingly and encouraged the unlisted ones to observe as well from January1st2007. Noteworthily, the new standards adopted fair value method in place of historical cost method which improved the relevance and effectiveness of accounting information. Whereas, China has not implemented the new method of recognition, measurement and disclosure of specific accounting standards yet. In practice, differences and contradictions exist when adopting fair value method which increases the possibility of earnings management. To solve this problem, on May31th,2012, the Ministry of Finance issued the "Enterprise Accounting Standards No. x:Fair Value Measurement (Draft)", requiring that feedback should be handed over to the Accounting Department of Ministry of Finance before August17th,2012. It follows that, in order to converge with International Accounting Standards and better serve China’s economic development, a sound and consistent implementing system of fair value should be established.On the basis of annual report disclosed in2011, this paper performed statistical analysis on the implementation of fair value method of listed companies and tried to explore problems when implementing the new method and presented suggestions and enlightenments accordingly.This paper is divided into six parts:The first part gave a brief introduction of the background and significance of the research, reviewed the literature from home and abroad regarding the subject and stated relevant research methods. The second part, the underlying fundamental analysis on the application of the fair value. First, the criterion fundamental analysis of the fair value formed a brief summary on the fair value Standards of the United States and the draft guidelines on the fair value Standards of China. Second, the fair value measurement attributes analysis and benefits analysis, compared the fair value and historical cost, replacement cost, net realizable value and the present value of future cash flows from the relationship between, analyzed the advantage that the fair value real reflect the enterprise’s financial position and operating results, business capital preservation and recognition and measurement of financial instruments. Third, the criterion fundamental analysis of corporate accounting standards, elaborated the specific application of the fair value in the long-term equity investment standards, investment real estate standards, non-monetary assets exchange standards, impairment of assets standards, debt restructuring standards, corporate mergers standards and financial instruments recognition and measurement standards.The third part, the statistical analysis on the application of the fair value in the annual reports of listed companies. First, overall analysis on the applications of fair value in the listed companies, analyzed situation of specific data with the scope of application and disclosure on three levels of the fire value recognition in the listed companies in. Second, the focused analysis on the application of fair value in the listed companies, analyzed impact of specific data with the application of fair value in the financial instruments and investment real estate. Third, the in-depth analysis on the applications of fair value in the listed companies, analyzed impact of specific data with the application of fair value in the assets, liabilities, and net profit of individual or all the listed companies.The fourth part, the problems analysis of fair value in the china’s application. First, the direct level problem analysis on the applications of the fair value, through statistical analysis of listed companies, the application of fair value are not wide, the information disclosure of fair value are not inadequate and nonstandard, there is a surplus management issues, and make profound analysis. Second, the accounting staff level problem analysis on the application of fair value, pointing out problems in the accounting personnel ethical standards and professional competence, and make detailed analysis. Third, the environmental dimension problem analysis on the application of the fair value, through statistical analysis of listed companies, the market environment for the application of the fair value is not immature, audit environment is not imperfect, asset evaluation environment is not standardized, and make profound analysis.The fifth part, the related countermeasures of fair value in the china’s application. First, improve and effectively implement underlying system on the application of the fair value, pointing out that only the fair value standards as soon as possible, and to publish the interpretation and application guidelines of fair value, in order to improve the operability in the application of the fair value, in order to make the better development in the application of the fair value. Second, improve and effectively implement regulatory system on the application of the fair value, point out that listed companies should improve the internal control system, increase enforcement, play a corporate governance performance:improve listed companies outside the regulatory system, the regulatory authority make laws and regulations with a unified standard, define permissions and responsibility, strengthen cooperation, that achieve full external supervision.The sixth part, conclusions and outlook. Concludes the paper content, derived the relevant conclusions on the application of fair value in the listed companies, indicating that this paper analyzes the innovation and contribution, prospects for prediction on the application of fair value.In this paper, apply to normative research and statistical analysis of data, the elaborate research on the application of the fair value, add up data associated with the fair value in the year2011annual report of listed companies, and analyzed, acquire the relevant conclusions on the application of fair value in the listed company, research further on the data and conclusions, and then propose problems on the application of fair value in the china’s listed companies, and the related countermeasures to improve the application of the fair value.The enlightenments of this paper are mainly reflected in the following aspects: First, following the latest state of accounting standards, analyzed and reviewed timely "Enterprise Accounting Standards No. x:Fair Value Measurement (Draft)" for the release in China, pointing out that the definition, frameworks, content and difference on fair value.Second, the differences related only to accounting elements measured with contain accounting elements measured, corporate accounting standards that involve in the fair value measurement attribute were counted as19and26projects, and presented in a composite form, compared with the previous single simple statistical model has more strong generality and explanatory.Third, analyzed the statistical data from the annual reports of listed companies, it is possible from whole to part, from the focus to the individual, from the general to the particular, and use to schematic and detailed, reflect accurately the application situation of fair value in the listed company, efforts to research the inherent logic and nature of the data, uncover problems on the application of fair value in the listed companies. By in-depth analysis, propose the relevant count ermeasures from the standpoint of quality on the applications of fair value.