New Zealand Financial Accounting. Essay

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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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While property at the fair value measurement can well reflect the changes, it can at any time on the derivative financial instruments to measure the rights and obligations of reflection, and provide relevant information to the users of the information.

Along with active capital market and the rapid development of science and technology, the fair value measurement will increasingly shows its rationality and necessity, is bound to further enhance and improve the quality of accounting information system.

4 The challenges for the use of fair value measurement

The use of fair value measurement attribute to enterprise's development has a profound impact. However, the use of fair value is faced with many challenges. Mainly embodied in the following aspects:

1 The system of the market is not perfect enough. For the lack of effective management of listed companies, the false accounting information disclosure, application of fair value is facing high risk. The government's intervention on the market also is relatively common, causing the price of resources often deviate from the market. Market information can't fully reflect the real
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