Improve The Fair Value Of Applied Research

Fair value is the direction of accounting. The newly issued Accounting Standard for Business Enterprises have converged with IFRS, in which there is considerable usage of fair value. It means that the problem about fair value we face has turned from "if " to "how" .This paper aims at the "how-to-use" problem, it reviews the theoretical and practical researches related to fair value, analyses China' s treatment of fair value, examines the causes that hindered broader use of fair value, and provides some ways to improve the use of fair value in our country.The main conclusions and tributions of this paper include the following:a. Clarify the implications of fair value. The author suggests that take fair value as an multiple measurement attribution is confusing. To make out the implication of fair value, one should consider the market assumptions, the tense, and the viewpoint of valuation. Fair value is a single measurement attribution.b. Examine the causes and settlements for accounting mismatch. The author recognizes that the unbalanced use of fair value in financial assets and liabilities is the main cause of accounting mismatch. To solve the problem standard setters developed several unusual accounting method such as hedge accounting, the author makes it clear that only the use of fair value accounting can completely solve the question.c. Chinese listed companies have applied fair value accounting with caution. As showed in the Reconciliation between the new and old CAS and 2007 Interim Financial reporting, listed companies apply fair value accounting with caution , the use of fair value has limited influence on companies' financial condition.d. The unsound financial markets and lack of basic institution are the main causes of differences between Chinese and foreign banks. The paper uses case study to show that because China has not yet developed some basic institutions, the development of financial markets have lagged behind international financial markets, thus hinder the use of fair value in China.e. Construct the framework to improve the use of fair value. It includes three ways: i)to improve the market conditions ; ii)to improve the efficiency of all the segments that involve in fair value;iii)to provide framework of fair value measurement.