Research On The Application Of Fair Value In China Development Bank

ABSTRACT:Since1970’s specially1990’s, great changes have taken place in accounting environment, the traditional accounting model which is based on historical cost measurement is becoming more and more difficult to accommodate with the requirement of economy’s development. The using of fair value method has been argued for a long time between accounting standards setters and banking regulation bodies. There is no doubt that using fair value measurement will bring serious challenges to the financial reporting of banks which used on historical cost measurement, at the same time, it can take a considerable impact on information users of financial reporting.Based on this background, firstly, this paper analyzes the fair value and its theory. Respectively, this paper introduces the definition of fair value and its characteristics, accounting objective theory, theory of accounting information quality and comprehensive income theory. Secondly, this paper studies the present situation of the application of fair value in China Development Bank from three aspects of the balance sheet, income statement and notes, then compares it with the five big Banks in America, and finds the existing problems:the application of the fair value is light, the information may be lack of reliability and the note disclosure content is not standard. Thirdly, the paper analyses internal reasons of the China Development Bank and external theoretical reason, as well as the reason of the external supervision according to the game theory. Finally, the paper put forwards a control mechanisms of fair value measurements to promote it better application in China Development Bank.