Abstract review on paper The discuss on application on Fair value
In March 2007, American New Century Financial Corporation filed for bankruptcy protection, which started the US sub prime mortgage crisis. The crisis evolved into a global financial crisis with the trades of financial derivatives in the global capital markets. Both accounting and financial sectors are concerned about Fair Value Accounting Standards in the crisis. Bankers think that Fair Value Accounting has played the role of adding fuel to the flames in the crisis. However, accounting sectors think that Fair Value Accounting has nothing to do with this financial crisis. They think that fair value played a positive role in this financial crisis. Using the fair value model, the accounting profession exposes the financial asset bubble timely, open manner and transparent regulatory, making financial sector, financial authorities and investors face and defuse financial risks. Simultaneously the investors could comprehend the scale and dynamics of crisis more efficient and timely. This paper illuminates that this financial crisis is not the Fair Value's fault, and deeply researches the relationship of financial crisis and fair value measurements. According to the analyze of American Lehman Brothers Holdings, this paper illuminates that this financial crisis is not the Fair Value's fault, and deeply researches the relationship of financial crisis and fair value measurements. Firstly, in my view, the root cause of this financial crisis is not fair value. However, Fair Value Accounting magnified the loss of this crisis. In condition of market price dropping and lack of market functions, the loss under unreasonable market value write-down is much lager than the actual loss. Secondly, I analyzed the defects of the fair value in the theory and practical application. Finally, I put some suggestions forward to apply in our country to the fair value. On the basis of above work, the study conclusion: Compared to other measurement attribute, fair value is still a better choice. As the outbreak of the financial crisis is a test of it. There are still some problems in the using of fair value, which need to be further modified perfected. Market and fair value accounting standards influence each other: fair value accounting standards based on the market price; the effectiveness of market impact the market. A more relevant and appropriate accounting standard could promote the development of capital markets more effectively; the friction with it in the process of market could promote the reflection and improvement of standard on the other side. I believe fair value will become an irreplaceable important measurement attributes with improvement in the future.
2015.4.6 |
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