Accounting Of Derivative Financial Instruments

After the seventies of the 20th century, with the strong impacts on world economy from a series of major events, such as the disintegration of Brettons Woods System and financial liberalization, etc., the risk on the international financial market began to increase sharply. For the purpose of evading and scattering the risk, derivative financial instruments arose at the historic moment and have obtained rapid development. At the same time, they were challenging the traditional accounting theories. In view of the situation, many accounting organizations are reforming traditional accounting theories, aiming to more overall and actual reflection on the risk and value of derivative financial instruments through accounting information. Among the organizations, International Accounting Standard Committee and Financial Accounting Criterion Committee of U.S.A. have made great progress. Besides, other countries or regions, such as Britain, Canada, Australia, Japan, Taiwan, etc., reached certain results too.In the article, firstly the writer introduces the development of derivativefinancial instruments and derivative financial instruments accounting. In addition, presents the stipulations in above-mentioned organizations on definition, confirmation, measurement and disclosure of derivative financial instruments. On this basis, the writer defines derivative financial instruments renewedly and puts forward confirmation procedure of derivative financial instruments by financial component approach, that is, initial recognition, subsequent recognition, and derecognition. Considering the situation of our country, the writer advises mixed measuring mold at the present stage. At last, the writer believes that within-form-report and out-of-form-disclosure should be combined, and simultaneously, out-of-form-disclosure should be attached more importance. Moreover, a series of suggestions on risk disclosure of derivation financial instruments are put forward.Entering WTO, we are to face a global financial market, while the theories on derivative financial instruments accounting in our country are still weak. Wish the article be helpful to the theoretical construction.