On Derivative Financial Instruments Accounting Research

In the 1970s, the bretton woods disorganized, the worldwide oil crisis burst, and the international financial contest intensified. In order to avoid the risk and to seek survival as well as development in the fierce competition in the market, financial institutions must make innovations to traditional financial instruments. As a new means of risk management, derivative financial instruments emerged. The emergence, development and extensive application of derivative financial instruments, not only brought huge impact to the financial markets but also had a great influence on the traditional financial accounting system. As a frontier area, derivative financial instruments accounting is regarded as the "one of the ten accounting difficult problems during the 21st century."This paper has made a systematical and theoretical research on derivative financial instruments accounting, which took the traditional theory of accounting and the colorful financial innovations as background, based on the accounting concept of the derivative financial instruments, used accounting recognition, measurement and reporting as the main clue, gave a systematical exposition from aspect to range on derivative financial instruments accounting issue, and has created a relatively completed theory system of it.First, the paper made a brief review of the production and development of derivative financial instruments, and from the perspective of accounting, made an introduction to the concept and classification of them. Then, from accounting recognition, measurement and reporting three aspects, the paper comprehensively discussed the huge impact on traditional accounting theory and practice which was brought by derivative financial instruments, pointed out the necessity of accounting normalizing to them, and introduced the domestic and international present research situation of them. Before analyzing derivative financial instruments accounting system, the paper rebuilt a new accounting element concept framework: extended such assets "rights" to include financial assets, and extended such liabilities "obligations" to include financial liabilities, in this way, the recognition range of accounting elements has been enlarged, so that we could include derivative financial instruments to the accounting statements. In the accounting recognition sector, the paper mainly solved when derivative financial instruments should be put into the accounting system and when should be got out of it; the author advocated adopting financial component analysis to discontinue recognition of derivative financial instruments. On measurement the paper though, fair value is the most relevant accounting measurement attribute to derivative financial instruments, at an appropriate time, we should carry out full fair value model to measure them. Finally, the paper gave a discussion on a narrow respect of derivative financial instruments accounting reporting issue, it thought, although the derivative financial instruments have already been recognized in the accounting statements, they still need to be disclosed detailed. After that, the paper pointed out the main contents we should disclose in the notes, and also proposed the specific principles of derivative financial instruments accounting disclosure.The innovations of this paper are: it has given an accounting definition of derivative financial instruments at the respect of accounting research, expanded the accounting concept framework, and amended the definition of assets and liabilities; in accordance with the accounting system, it has analyzed derivative financial instruments' recognition, measurement and reporting, constituted a relatively integrated theory system of derivative financial instruments accounting, which has a higher theoretical value and also a significant practical value.