The Use Of Fair Value In China

In the knowledge economy, the economic environment fluctuates violently. The book value of accounting entity's economic resource bases on the historical cost can't reflect its market value, which misleads the decision of investors. An economic value that can reflect real condition of enterprise resource and abandon the historical cost comes to birth. That is fair value.In recent years, internationally, discussion has focused on application details, not the rationalization of fair value in financial accounting. Fair value has been the main tool of recording financial assets in the financial standards. It has gradually record some non-financial assets, which may totally replace historical cost in the future.With the change of accounting environment, such as China has joined WTO, IPO of Chinese enterprises, the new accounting standards issued by Chinese government require the listed companies to record financial assets at fair value in financial statements. The thesis will focus on the difficulties and suggestions about the use of fair value in China.The thesis is divided into five chapters. Its main contents generalize as follows: Chapter 1 introduces the background and the significance of the research, the overview of domestic and international research on fair value, and the method and framework of the research. Chapter 2 analyzes theconcept and characteristics of fair value comparing with historical cost and makes a review of research and application domestically and internationally. Chapter 3 introduces application of fair value internationally in financial assets and non-financial assets respectively. Chapter 4 analyzes the necessity of fair value in China, introduces current application, analyzes difficulties of application, looks forward to the future of application and gives some suggestions. Chapter 5 draws a conclusion of the thesis.