| For a long time, historical cost has been the main measurement mode, but with the development of economy, especially lots of derivative financial instruments come forth, it is difficult for historical cost to cope with the situation gradually. To keep the information's quality, all the standard-making institutions try to measure all the derivatives by fair value. Inspect of many difficulties and resistances, the research on fair value is progressing, and the fair value has pervaded into other items' measurements and dealing methods. Problems and obstructions which come into being endlessly make the measurement of fair value become one of the most hard questions of the modern financial accounting, using fair value comprehensively is the tendency, and the research on it in our country lags as well practical operation. So there are deep theoretical and practical significance in studying on fair value measurement attribute.Starting with cost and historical cost, this paper sets forth the transition from historical cost to fair value and its incidental transitions. Combining with Statement of Financial Accounting Concepts No .7 "Using Cash Flow Information and Present Value in Accounting Measurements'", it analyses the relations between fair value and other measurement attributes, especially present value, and agrees that "the only objective of present value , when used in accounting measurements at initial recognition and fresh-start measurements, is to estimate fair value." This paper divides the application of fair value into two parts to discuss. The paper chooses related accounting standards of IASC (IASB) and FASB. By contrasting and analyzing the suggestions to the disclosure, recognition and measurement of financial instruments, it points out this is a process onward step by step. The present situation is two-dimensional mixed measurement mode that historical cost and fair value exist simultaneously. The main reason is that the financial images of banks will be affected and their operating risk will boost if fair value uses. The paper introduces the follow-up research progress, indicating that the goal of the standard-making institutions is clear, and they have been striving for it.The paper also analyses the application of fair value to other items, and that shows the fair value has been used not only on derivative financial instruments, but also onother items for a long time. It divides these items into two types according to whether cash flow has been involved or not. The transitions of the dealing methods shows that fair value has soak into all the field of financial accounting. The paper analyses the present situation in China, and puts forward corresponding countermeasures aiming at the existing problem.Part one: From historical cost to fair valueThis part discusses the similarities and differences of cost in economics and accounting, and analyses the characteristic and advantage of historical cost. Then it expounds how to transfer value to price, accounting use fair value as a measurement attribute and the meanings of fair value. It points out that the introduction of fair value is the request of quality of accounting information.Part two: Using of fair value on financial instrumentThis part is the most important part in this paper. Firstly, starting with finance instrument, it discusses the impact on accounting after the derivative financial instruments rush out and the instancy of changing historical cost's attribute. Secondly, it introduces the related standards of IASC & FASC and analyses the causes of present situation. In the end, it presents the follow-up research progress.Part three: Using of fair value on other itemsIt's also the important part of this paper. In the beginning, it points out that the fair value has been also used on other items for a long time. Through analyzing the transitions of the dealing methods of other items, it shows that there are transitions from historical cost to fair value in all the field of financial accounting.Part four: Pr... |
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