New Zealand Financial Accounting.

1527 words 7 pages
1 I n t r o d u c t i o n

IFRS 13 provides a principles-based framework for measuring fair value in IFRS. This is based on a number of key concepts including unit of account; exit price; valuation premise; highest and best use; principal market; market participant assumptions and the fair value hierarchy. Fair value is an important measurement on the basis of financial reporting. It provides information about what an entity might realize if it sold an asset or might pay to transfer a liability. In recent years, the use of fair value as a measurement basis for financial reporting has been expanded. Determining fair value often requires a variety of assumptions as well as significant judgment. Thus, investors desire timely and
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2 The current of the corresponding legal system is not sound. The related legal system is not sound has seriously influenced the application of the fair value measurement in accounting. Regulatory oversight is difficult, the fair value of fraud phenomenon is difficult to find. The unsound legal system makes it more difficult for the imperfect market economy system the application of fair value.

3 Hard to ensure the reliability of fair value measurement. For objectivity, uncertainty and verifiability based on actual transaction of historical cost measurement, though fair value measurement on financial statements can provide more relevant information, but because of the uncertainty and volatility, it is difficult to meet the requirements of the accounting information reliability.

4 The fair value measurement of the actual operation is difficult. In real economic life, many enterprises there are many different kinds of assets, and in different market environment, it is difficult to discern the truth of market information, use of fair value is plagued by these problems.

5 The fair value measurement of the technology is not mature. Fair value to become a real operational accounting attribute, it must solve the different market situation how to form the fair market value as well as in the case of the lack of fair market value, accounting personnel how to through the measurement model and the choice of appropriate measurement appraisal


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