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With the price of interest rates, exchange rates, commodities and financial assets fluctuating substantially, the historical cost accounting in an unstable economic environment has exposed serious deficiencies, especially in the 80’s of the U.S. Savings and Loan crisis of housing, based on historical cost measurement model The financial report not only fails to regulators and investors for financial early warning signal, but to mislead their judgments on these financial institutions. Thus, the accounting profession will be turned to reflect the present and future measurement properties. With the market competition increasingly fierce, the rise of knowledge-based economy and the acceleration of financial innovation, business’s risks and uncertainties increase, a large number of intangible assets and derivative financial instruments such as the emergence of soft assets, must provide a bigger stage for the fair value. Compared with the historical cost, the use of fair value is not long, there are still many disadvantages in it, although it has irreplaceable advantages, however it is also suffered debate and blame. But in the long run, the fair value measurement is still a reasonable way, particularly for many financial derivatives, but there are still many complex issues to be resolved. We believe that with the model of financial instruments measured the steady improvement, the further development of valuation techniques and market unusual situation for the fair value method under the guidelines for a more complete definition, these problems will be properly addressed. In any case, the fair value measurement will be the development and application of the general trendPaper is divided into four parts, including the following main elements:The first part is based on fair value accounting, fair value and this on the concept of fair value accounting were analyzed and discussed, while the fair value measurement is based on’ the basic theories were summarized, from accounting, economics, different angle fair value is based on set of basic economic theory of accounting, but also studied the issue after the good theoretical preparation.The second part of fair value measurement and its application, the advantages of this measure and the environmental conditions required for analysis, were also described improvements in the fair value of the course of development at home and abroad.The third part of our application of fair value accounting problems and reasons, this part of the form of case analysis using the fair value accounting application there is a specific issue to improve in China.The fourth part is some perfect idea of the fair value accounting’s application, put forward a number of fair value for the better and more accurate application of measures proposed, recommended the establishment of the implementation of fair value accounting in a good environment, thereby protecting the proper application of fair value accounting as well as better run.
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