Research On Investment Property Fair Value Model Of AVIC Real Estate

Because of the special feature of investment property, the historical cost modelcan not truly represent the value of the investment property, only the fair value modelcan represent the true value. Accounting Standard for Business Enterprises2006doesnot treat the fair value model as the primary model, and lacks detailed applicationguidance, which leads to small quantities of enterprises using the fair value model inaccounting practice, and causes many problems in specific application. Thesuperiorities of fair value model are not fully utilized. Research on fair value model forinvestment property to solve the above problems is of important theoretical value andpractical significance.This paper first introduces the provisions about investment property and fair valuein accounting standards, then by analysis proposes that, the application of fair valuemodel for investment property in accounting standard is necessary and feasible. Onthis basis, by use of related theory, the paper analyzes the problems in the applicationof fair value model for investment property existed in the case company in detail,problems including: great subjectivity in deciding transfer date and inconsistentaccounting booking; fair value measurement lacking consideration about rental income,set up bright-line and adjusted transaction cost; lacking disclosure about rental incomeand fair value hierarchy. To solve these problems, the paper proposes followingrecommendations: establishing policy for deciding transfer date and bookingconsistently; paying attention to rental income, adjusting fair value and transactioncost correctly; disclosing rental income and fair value hierarchy. At last, the paperdiscusses inspirations for the real estate industry, in hope of promoting the applicationof fair value model in the industry. This paper innovatively concludes that, althoughthere are some problems in the application of fair value model for investment property,with further study of fair value, all the problems will be gradually solved, and the fairvalue model will surely become the dominant model for investment property.