Research On Application Of Fair Value Measurement Standards

Fair value is a hot issue in the field of accounting. FASB and IASB issued the fair value measurement standards to develop a unified fair value measurement guide in 2006 and 2011 respectively. Our Ministry of Finance in reference on the basis of IFRS13, combining with our actual situation, drafting the "Accounting Standards for Enterprises No. x--Fair Value Measurement (Draft)" in May of 2012. After nearly a year and a half to solicit the views, the Ministry of Finance issued the "Accounting Standards for Enterprises No. thirty-ninth--the Fair Value Measurement Standard" in January of 2014, standardized the definition of fair value, measurement and disclosure, achieved with the international convergence of accounting standards. But the guidelines did not mention the use principle and the application of the fair value valuation of technology; not classification best use of non-financial assets, confirmation method is also not clear its fair value; not explain how to apply the rule to liabilities and the enterprise’s own equity instruments by cases.The author explains the definition of fair value and the related concepts in detail, to facilitate a better understanding of the enterprise. Through the form of the three valuations of the fair value of the contrast, were distinguished from the definition, application principle, application, on the premise of information and other aspects, so that enterprises can better use of valuation techniques. The author discusses the application of standards in terms of non-financial assets through the cases, the best use of the type refinement, and puts forward several options:if the market was not active, it should be measured on the fair value to the market; if it can produce continuous cash flow, it should be based on income measurement; or it should be based on the cost method of measurement. The author uses cases to study the application criterion in liabilities, refines the application conditions of fair value of the liability, if there was not an active market for the debt and not by the other party as assets, it should be measured on the fair value of the discounted cash flow method. The author discusses on the application of standards in the equity instruments. If it was bought recently and significant impact event was not happened, it should be confirmed in the recent trading price; or it should be measured on the fair value at the stage of development of the issuer of the selection of appropriate valuation techniques. The author also proposes guidelines for the application, such as building the guiding framework for the application of fair value measurement, expanding the scope of application of the standards, improving the valuation procedures etc.