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Research on Issues of Derivative Financial Instruments Accounting under the Condition of Cyberization |
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Creating colorful derivative financial instruments by continuing financial innovation is the important feature of modern finance. After twenty years of continuous research, the major accounting standard setters have made great breakthroughs
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Submitted On: 04-01-2010 | Views:
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Creating colorful derivative financial instruments by continuing financial innovation is the important feature of modern finance. After twenty years of continuous research, the major accounting standard setters have made great breakthroughs and progress in the research of derivative instruments accounting. The initial accounting method on derivative instruments—non-financial statement disclosure has already replaced by the combination method of recognition with financial statement and non-financial statement disclosure.From the analysis of the definition and characteristics of derivative financial instruments, this article inquires into some issues of the derivative recognition, measurement and reporting under the network environment.Derivative should be put into balance sheet and recognized as assets or liabilities when derivative contract is signed. Derivative's value could be a great change in a short period of time and contains a huge risk. Therefore, for confirming the large change of derivative's value in time ,electronic data should become a sort of reliable source document as the basis of accounting recognition and it is necessary to regard the risk contained by derivative as a new accounting object and provide users of accounting report with risk information.Because of the unique leverage of derivative instruments, derivative must be measured by fair value. In order to promote the relevance of accounting information of derivative's fair value on the balance-sheet date, market price should properly be adjusted to confirm derivative's fair value. With the rapid development of computer and network technology, it is able to measure all kinds of derivative instruments in the active and non-active market by fair value attribute and quantifying the inherent risk of derivative by the VaR model will become possible.To report the accounting information of derivatives fully, presentation in statement and non-financial statement disclosure should be adopted at the same time. If the huge and rapid value change of derivative be presented within statement, the traditional principle of income realization should be broken through. The risk information should be the most important emphasis on non-financial statement disclosure. The value of derivative may cause tremendous changes in a short period of time, so the users'requirement to timeliness of derivative accounting information is much stronger then other assets or liabilities. Only the internet financial report could meet these special requirements of timeliness on the derivatives accounting information.
Article Source:
http://latest-finance-articles.com/Accounting/Research-on-Issues-of-Derivative-Financial-Instruments-Accounting-unde-1795.html
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