Fair Value Measurement Facing the Challenge of Global Financial Storm

This paper discusses fair value measurement that has being faced with a very serious financial crisis.The paper recognizes that fair value measurement brings new ideas in financial accounting.If all assets and liabilities are measured at fair value(That is to apply market-to-market accounting),financial reporting may bring the financial information of business enterprises at market value but not at historical cost.With respect to financial instruments,fair value is the most,even only relevant measurement attribute.Fair value measurement relies on the following three basis:a.It's initial recognition is not the actual but hypothetical transactions;b.As a measurement attribute it is only estimative price;c.It's measurement is based on market but not on exchange between two entities.It is obvious that the reliability of financial information measured at fair value must be raised a query if above basis are unvailable(e.g.In case of financial crisis).The paper concludes that fair value is still a useful measurement attribute of financial accounting,but now must be reviewed and modified according to sections 132 and 133 of U.S.Emergency Economic Stabilization Act of 2008.The paper also concludes that financial accounting,financial statements recording and reporting historical transactions by using historical cost is the fundamental measurement attribute and other attributes including fair value are only supplement.Accounting will never change into estimating.