Research On The Application Of Fair Value

All the time, the historical cost has been the main measurement attributes, but with the rapid social and economic development, major change of economic environment and large numbers of new trading instruments, the book value of accounting economic resources which are measured at historical cost deviates from the market value seriously, and historical cost has become increasingly unable to meet the information needs of users of financial statements. In this context, fair value, which is a measurement attribute that can carry out these new trading tools and reflect a reasonable measure of accounting economic resources came into being and gradually popular. The standard-making institutions regarded a fair value measurement as the objective of the study in order to enhance the usefulness of accounting information and its quality, despite heavy resistance, but the fair value of the research is still growing vigorously.China promulgated new Accounting Standards for Business Enterprises, on February 15,2006, which regarded fair value as one of the accounting measurement attributes. This is consistent with the development trend of international accounting measurement, but also adapts to the objective needs of economic development. With economic globalization and the development trend of international convergence of the Accounting Standards, it is inevitable to use the fair value widely in China. The introduction of fair value is not only the highlight of the new Accounting Standards but also the focus of many disputes. Accounting measurement issues is the core link in accounting information disclosure. In the current accounting measurement attributes, the fair value measurement is considered to be the most relevant measurement attribute. In the near future, the fair value is likely to replace the historical cost measurement completely and become the mainstream of accounting measurement. However, the current accounting academics and practice begin to question fair value because of the endless problems and many obstacles in the application of fair value.A financial crisis in 2007 pushed fair value that is controversial itself into the cusp. Many financial institutions in the United States that engaged in financial instruments was in financial trouble and in the brink of bankruptcy, however, before these financial institutions are in financial difficulty, the financial statements which based on the historical cost measurement shows a "good" condition and it truly exposed the shortcomings of historical cost measurement. Fair value is able to fully reflect the true value of the financial assets and financial liabilities and it can reduce financial risks effectively.Fair value is the most relevant measurement attributes of the market economy, and also is experiencing the test of the financial crisis. In this crisis, we see the advantages and disadvantages of fair value shown in the use of it, and we also see the huge space to use fair value in the future. The research on fair value measurement attributes makes great significance to draw up the fair value accounting standards and application of fair value measurement attributes.This article mainly discusses fair value from the theory and application of the fair value.From the part of the theory of fair value, this article carries out research and analysis on the related theory of fair value and further enriches and improves the theory of fair value. In the study on the theory of fair value, the article make a comparative analysis of the definition of fair value at home and abroad, the advantages and disadvantages of fair value measurement attributes, and the relationship with other measurement attributes, especially compared with the historical cost. Fair value is revealed as a kind of complex measurement attributes and its accounting information quality characteristics, especially balance on the reliability and relevance.From the part of the application of fair value, this article puts forward the applied suggestion of application of fair value in the post-crisis era. First of all, this article analyzes and researches the relationship between fair value and the financial crisis, citing the bankruptcy of Lehman Brothers for analysis; and further analyzes the exposure of the disadvantages and advantages of fair value in order to review fair value. Secondly, the article reconsiders the context of the financial crisis to re-consider the constraints in the application of fair value measurement. Along with the deepening of China's market economy development and the convergence of international financial accounting standards, the full application of fair value in China is inevitable, but its application is moderate, cautious and conditional. Finally, based on the above discussion of fair value, the article further proposes several suggestions for improving applied theory of fair value, amending the fair value accounting standards, improving the overall quality of accountants and improving the market conditions for application of fair value.The innovation of this article:First of all, the proposal of fair value is the result of the balance between the reliability and relevance of accounting information, not biased towards any party; secondly, this article analyzes and researches the relationship between fair value and financial crisis by examples. It not only points out some deficiencies of fair value measurement attributes in the crisis, but also illustrates the incomparable advantages of fair value measurement. And the article reviews and reassesses fair value objectively; thirdly, this paper puts forward suggestions for some problems in the application of fair value at this stage, in order to improve fair value to have better development in China.Research on issues related to fair value is hot and difficult topics of the current financial accounting. As the limited knowledge and the limited time of research, it is difficult to get a breakthrough in the application of fair value in China. The shortcomings of this study:It is still difficult to research on the reliability of fair value in accounting field. The application of fair value is limiting conditions. In the case that can not directly access fair value, the value appraisal techniques can be used to assess fair value, which may reduce the reliability of fair value. And because of the uncertainty of current market conditions, the reliability of fair value has become more complex. These are the unresolved issues still to be further research.