The Research On Accounting For Derivative Financial Instruments

In the 1980's financial risks has increased rapidly. New financial instruments emerged in an endless stream on the international financial market. A large number of derivative financial instruments emerged as the result. As it were, derivative financial instruments also contained huge risk meanwhile it can spread risk and reduce the cost of capital. In recent years, so many companies bankrupted because of the transactions with derivative financial instruments. Under the tragedy, the whole society lay their attention more and more on the responsibility of accounting. Some criticized the CPA firms the others criticized the accounting standards. Virtually, all the disputed about the derivative financial instruments were the disputes about the basics of Conceptual Structure of Financial Accounting. So how to settle the challenge to traditional accounting recognition and how to develop the new theory to disclosure the proceeds and risks by using derivative financial instruments in the financial statement has been a hot wordwide issue.By consulting the rules in IASC and FASB, with the Accounting Standards for Business Enterprise which ministry of finance launched in Feb.15^th,2006, comparing the difference between international and national accounting operation in derivative financial instruments, the paper trying to discuss the aspects of recognition, measurement and disclosure.The first part mainly discusses study objective and significance, also summarry of domestic and foreign study. Then points out that both theory study and practice operation exist a certain extent localization.The second part introduces derivative financial instruments firstly, then analyzes the application in China, and the significance caused by new Accounting Standards for the development of derivative financial instruments study.The third part is for recognition. By comparing rules between domestic and overseas, and enumerating the difficulties, the paper mainly agrees with the "Finance Composed Analytical Method" which adopted by the new Accounting Standards. The fourth part is for measurement. "Fair Value" is the emphasis in this part. Both its advantages and disadvantages are intorduced.The fifth part analyzes the disclosure problem for derivative financial instruments all-around, including the objective and principle, and then put forward correspond advice for better derivative financial instruments disclosure.