Research On Establishment Of Standards For Fair Value Measurements

Application of fair value in our country has gone through a tortuous process, from thebeginning to the Treasury’s preliminary enable emergency stop now and then re-enabled,can be described as twists and turns. However, no matter how tortuous the process is,adding the fair value measurement in accounting is an irresistible trend. Compared with themeasurement of the mainstream historical cost, fair value can be considered as a newconcept, therefore a complete application guidelines provide clear guidance and practicesfor accounting practitioners. The Ministry of Finance in May2012issued draft guidelinesfor fair value measurement, to receive wide proposals for the preparation of the officialrelease of fair value standards. This article will have a deep analysis of the fair value andeach criterion in the current fair value standards, in order to provide pertinentrecommendations for the development of the fair value standards.The first chapter of this paper describes the abroad research background of fair valuerecently; second chapter introduces the basic theory of this article related to the fair value:the definition of fair value, the basic features of fair value as well as the fair value valuationtechniques. This article focuses on the importance of fair value standards and proposals forthe construction of the fair value standards. The third chapter discusses the necessity tobuild fair value standards through the fair value qualities and bug of the fair value standardsin use. The fourth chapter will compare IFRS13with SAFS157and the fair valuestandards (draft), to identify similarities and differences between them and put forwardsuggestions for improving the fair value standards. Because IFRS13and SAFS157usedthe same language, and the content become convergence basically, so this article willcompare IFRS13with the draft. As the guidelines cover many aspects, this paper will bedivided into three comparative analysis: definition, objectives, guidelines for thedevelopment of fair value, the fair value measurement and disclosure of fair value. Thefifth chapter based on the comparison of the fourth chapter presents the following proposals:(1) improve the definition of fair value;(2) the structure of the fair value standards need tobe adjusted;(3) the translation of some cited words in the fair value standards should bemore accurate and kept the same around the standards;(4) deal with the relationshipbetween fair value standards and basic accounting principal.As The Ministry of Finance has issued the fair value standards in the beginning of thisyear, this paper will make a comparison between the fair value standards and its draft and make a summary of its improvement. As the standards have not been implemented, there isno case which can demonstrate the use of the standards. This paper will provide somesolution suggestions focused on the matters that may occur during the implementation ofthe fair value standards. This paper suggests to create some external conditions to facilitatethe promotion of the guidelines:①improve the market environment;②improve theinternal governance structure;③establish authoritative asset valuation agencies;④improve the overall quality of accounting practitioners. At the end of the full text, chapterseventh makes a summary and future outlook.