Derivative Financial Instruments Accounting Recognition, Measurement Issues In Research

Derivative products are booming in the international financial market since 1980s. As a new creative tool, derivative products are widely used and deeply impact in financial market and corporate finance, as well as a challenge to traditional accounting rules. Proceeds and risks by using derivative products are asked to be reflected objectively and truthfully in the new accounting theory and rules. In this topic, I am trying to discuss some accounting problems about financial derivative products, mainly from three aspects: recognition, measurement and disclosure. By consulting the main points of international accounting theories, analyzing accounting rules in IAS32/39 and FAS133, comparing the difference between international and national accounting treatments in derivative products, I believe that derivative products should be recognized as an asset/liability or profit/loss, that should be measured by "Fair Value", which will be the only way of derivative products measurement in the future, that should be fully disclosed as the "Fair Value". We should try our best to these goals since our present accounting rules are far away form these requirement.