Study On The Fair Value Measurement Of Investment Property Of Listed Companies In China

In order to adapt to China’s economic development status better and to achieve convergence with international accounting standards better, the Ministry of Finance issued new corporate accounting standards on February15,2006, including a general standard and38specific standards. As an new added content, investment property, including the buildings and land use rights, which are held by enterprise for purpose of value-added, is separately reflected in the balance sheet. Investment property standard requires that if companies meet the certain conditions, they can use the fair value model for subsequent measurement. In May of2012, the Ministry of Finance has issued the "Accounting Standards for Enterprise No. X, Fair Value Measurements (Exposure Draft)", and set up a scientific project to widely gain insight into the application of fair value in companies, one of it is the application of fair value of investment property.This paper uses case analysis method to take the33listed companies as samples, which using the fair value of investment property during year2007to2012. By studying the motivation and economic consequences of accounting policy choices of investment property in listed companies, it comes to an end about the effect to the company’s financial indicators of fair value investment property at the beginning of the application and follow-up measurement. With specific cases then to analyze different motivations and the economic consequences of using the cost model and the fair value model companies from the perspective of corporate governance. Finally, the recommendations about the policy of implementation of fair value model are proposed.Article is divided into a total of six parts. The first part describes the background and significance of the paper, the basic concepts are introduces and explained research methods and innovation of this paper. The second part is a literature review, including research status in and aboard about the motives of fair value measurement of investment property, as well as economic consequences of investment property measured at fair value. The third part introduces the background of relevant system and motivation of investment property choosing the fair value model. The fourth part analyzed the economic consequences of investment property measured at fair value. The fifth part analyzed the reason of case company choose the fair value model and the economic impacts on EPS and ROA. It is concluded that the fair value measurement better reflects the actual business economic conditions, close to reality but volatile profits. The value and share price of investment property has a positive correlation under fair value measurement, which is able to reflect more relevant accounting information and it is convenient for the minorities and investors to take it as a reference. The final conclusion and recommendations of the policy of implementation of fair value model are proposed in Section VI.