Fair Value Accounting-Rationale and Selectivity

Accounting measurement is the core of financial accounting. As a newly raised field of accounting, fair-value accounting provides a more reasonable and useful measurement model for soft assets, such as intangible assets and derivative financial instruments emerging in the knowledge economy era. This article focuses on the background and development of fair-value as well as its nature. The application of the present value is the heart of fair-value accounting. The development and application of fair-value accounting is the general trend, which will influence the future formulation guidance of accounting standards in China.