Warrants Accounting System In China To Study

Warrant is a kind of financial derivatives, it's be used in the reformation of our market. But our research on this field always drops behind the developed western countries. Four new financial instrument accounting standards have been published on Feb.25 2006 by ministry of finance of China. It concludes the rules of recognition, measurement, disclosure and presentation for warrants and other financial derivatives. How to evaluate the new warrant accounting system. Are there any problems in practice. It's really meaningful to study these problems.The paper explained the relative theories on the warrant accounting. Be based on this, it compared our new warrant accounting system with international financial instrument accounting standards. At the same time, it evaluated the new warrant accounting system completely. The paper points out that there are three shortcomings of the new warrant accounting system, including initial recognition, measurement and disclosure. Then, the paper studied the shortcoming of warrant measurement mode for emphases. It pointed out that it was unreasonable to use the warrant's market price to be the fire value under the present capital market conditions in our country. The paper suggested that we should use the modified warrant measurement mode, it's a kind of temporary measurement mode under he present capital market conditions in our country. It suggests that we should use the warrant's theoretic price as the fire value. It could avoid the market price is not actually fire to be the fire value. At last, the paper gave several advices for the improvement of the warrant accounting system, which are relative to the present capital market conditions in our country and definitely to the shortcomings we have mentioned above. This paper is meaningful both for the share reform in our country at present and the long development of the warrant accounting.