Fair Value And In The Use Of Financial Derivatives

Since the 20th century 70's, along with the world economics swift and violent development, on the international money market have presented the formidable innovation power, thus cause the production of financial derivatives. The financial derivatives widely spread application already gave the international money market to bring the new vigor, also proposed the stern challenge. Because of their high risks, futurity and diversity, the accounting measurement of derivative financial instruments have always been a major concern of accounting calculation. Traditional theories and methods on accounting measurement cannot satisfy the new demands. So it is necessary to improve the present accounting system by introducing the fair value to enhance the relevance and the reliability of accounting information and replace the historical cost in calculating the derivative financial instruments so as to strengthen the disclosure of information.This article conducted an overview of fair value and derivative financial instruments at first, then combine the two parts organically, used the comparative analysis to compare the traditional accounting measurement and fair value measurement, determining the fair value's superiority of derivative financial instruments measure. At the same time it learned a lot of foreign derivatives accounting measure's experiences, on the basis of analyzing derivatives measurement, envisaged the prospect of the use of fair value in China. I think under present circumstances, mixed model which is composed of table historical cost measures and table of fair value and other relevant information disclosure is a good choice for financial derivative. Because it costs little of the latter measurement, generally, only need to meet the relevant requirements of the decision-making, besides derivative transactions coupled with greater risk, statements external users are often difficult to estimate the value of derivatives and profit and loss, therefore it is absolutely necessary to provide the form of statements to expose these information.