Research On Application Of Fair Value Measurement For Investment Property In Real Estate Industry

Comparing with the cost accounting model,fair value accounting model could reflect the value of investment property more accurately.However,the application of fair value measurement is not popular and receives less favorable comments.After the implementation of "Enterprise Accounting Standards No.39 – measuring in fair value",new challenges appear for the measurement of investment property at fair value.The investment property in real estate industry is most representative and typical,because of its substantial proportion,wide source and various conversions.Therefore,this thesis chooses real estate industry and researches the application of investment property's fair value measurement in it.Firstly,this thesis analyzes the situation of holding and the selection of measurement model of investment property in real estate industry.According to the data for the past four years,an increasing numbers of real estate companies transfer their measurement model from cost accounting model into fair value accounting model.By the end of 2014,17 companies use fair value model to measure their investment property in the real estate industry.Then,this thesis analyzes the situation of conversion,the acquisition and valuation techniques of fair value,and the fair value hierarchy,etc.Finally,According to the analysis of the influences caused by fair value accounting model in corporations' assets,equity and profit,some issues be exposed.The main issues include the difficulty to obtain fair value,the unlimited convection between inventories and investment property,the irregularity of information disclosure,the unfavorable implement of fair value measurement method,the fewer using of market approach valuation technique,the excessive dependence on external evaluation agency,the manipulation of financial data,providing opportunities for future earning management,and even providing the opportunity of turn from loss to profit for ST companies.According to the analysis of the present situation of these applications,we will summarize the above problems into 3 main aspects which include the lack of uniform standards,the fail of utilizing the inter advantages of real estate industry and providing opportunities for future earning management.Then,we will provide the relevant recommendation to solve these problems in all of the national,industry and enterprise levels.Complete the unified standards from improving the existing guidelines,the establishment of industry constraints,and the information disclosure from the accounting standards.Exploit the advantages of industry from establishing the experimental unit of fair value in real estate industry,establishing the sharing platform of the transaction information of real estate industry and enhancing the ability of asset assessment of corporations.Highlight the advantages of the industry from encouraging the development of third-party market brokerage firms,the establishment of real estate transaction information sharing platform and the use of observable inputs priority.Establish the sound and uniform standards from perfecting the existing principles,establishing the industry constraints,and standardizing the disclosure of information.Exert the advantages of real estate industry from encouraging the development of third-party brokerage firms,establishing the shared platform of transaction information and preferential using observable input value.Reduce the likelihood of earnings management from ameliorating the structure of the income statement,establishing the industrial self-regulation mechanisms and strengthening the development of professional ethics of accountants.Finally,Our goal is to achieve the extensive and deep development of fair value measurement model in China's real estate industry.