The Application Of Fair Value Measurement In The Investment Property And Financial Impact Study

With the gradual maturity of the real estate market, the community has been quiteconcerned about the financial issues relating to real estate and puts forward higherrequirements about the quality of real estate-related accounting information. In order toreflect the economic substance and real values of the investment properties, andregulate the confirmation and measurement and disclosure of investment properties,China’s Ministry of Finance has formulated the "Accounting Standards for BusinessEnterprises No.3-investment properties" for investment properties. Investmentproperties measured at fair value is an important element that real estate investmentcompanies must face. In this paper, on the basis of previous studies, to continue toexplore the application of the fair value measurement of investment properties andfinancial implications has theoretical basis and practical significance.In this paper, on the basis of the domestic and foreign study of investmentproperties and its fair value measurement, it introduces the basic theory of investmentproperties’ fair value measurement, analyses the content of investment propertiesvalue-added and its internal mechanism and the connotation of fair value measurement,and application, problems and reasons, puts forward the basic measurement principlesand confirmation methods of the fair value of investment properties. Then it takes anin-depth analysis from mainly four aspects such as corporate tax, earnings management,the performance of listed companies, and operation management of non-listedcompanies, and in the case study of listed companies and small and medium-sizedenterprises to deeply discuss the impact of investment properties’ fair valuemeasurement. Finally, it gives a multi-dimensional outlook for improvement ofinvestment properties’ fair value measurement.In this paper, through the research and analysis of the application of the Fair ValueMeasurement in the Investment Property, it finds out that most enterprises can chooseinvestment property subsequent measurement mode carefully in accordance with therequirements of the Accounting Standards for Business Enterprises, but only a fewcompanies choose Fair Value to measure investment properties, and there are differentstandards to recognize Fair Value, and information is incompletely disclosure. Thereare several reasons for companies not to use fair value, such as the strict conditions offair value measurement, very complicated measurement procedures and high acquisition costs, increasing the volatility of the Company’s operation performance,reducing profits operating space, short of supporting tax policy. The fair valueMeasurement in investment properties has influence on enterprises of corporate tax,earnings management, the Company’s operating performance and the companyoperation and management in different levels.This paper will provide guidance for companies to deal with investmentproperties measurement, provide references for commerce, taxation and otherinstitutions to deal with related issues, and has certain practical reference to improveand standardize investment properties’ guidelines and fair value measurementstandards.