Research on the principle and application of fair value measurement and reflection in market of China

Under the market-oriented economy condition, Chinese social, economic and technical environment have changed dramatically. The drawbacks of the traditional measurement model such as their one sidedness hysteretic nature has become more obvious. For this reason, after January 1, 2007, China has begun to use the new accounting standards in the listed company accounting process. The concept ‘Fair value’ has been widely used in the new standards (Dai, Guan and Lu, 2015) and this is a dramatic change.

In this circumstance, the aim of this project is combing the Fair value application situation in recent years together with its calculation principle to discover the potential issues for Fair value implementation and its solution in China. In order to fulfil the research aim, these objectives listed below should be followed:
• To fully understand what is Fair value and how its worked
• To study how Fair value is developed in China
• To identify the potential issue for further implement Fair value in China
• To analyse Chinese national situation and the necessary of using Fair value
• To give out the possible solution to solve the issues fund before
The rational for this project are, first of all, the researcher has been involved in the Fair value issues back in China. It makes the researcher is more experience than others about the Fair value issue. At the same time, the researcher is very interested in this topic, this will makes the discovering process less boring. In academic way, Fair value as an accounting measurement is very important in accounting system. In China, it is the quantification of financial information in RMB, accountants use these measurements to report information to internal and external users via financial statements. Meanwhile, at present there are more international business communication between China and other countries, which makes Fair value become more important for Chinese companies in order to meet the international standardization.

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The data used in this research will be the online secondary resources. However all the data collected will be primarily analysed by the researcher. For example the researcher will using one company’s annual report as an example, and using both Fair value and traditional accounting measurement to calculate and compare the result to find out the difference.

The relevant research which was done by the previous scholars will also been used in this report, combing the previous research and the researcher’s finding, will ensure the bigger picture for the readers.