Research on Valuation for Financial Reporting
|School||Southwestern University of Finance and Economics|
|Keywords||Valuation for Financial Reporting Value Type Accounting Measurement Attributes Fair Value Market Value|
Valuation for Financial Reporting (VFR) refers to the behavior and processes aimed at analyzing and estimating the fair value or specific value of assets and liabilities existed in financial reporting. Executed by Certificated Public Valuer (CPV) with specific appraisal technique, Valuation for Financial Reporting is based on Accounting Standards for Business Enterprises and relevant requirements for accounting measurements and disclosure. This new type of valuation reflects combination of accounting and valuation, in which both the two professions can benefit-for accounting, the total profession can better use the measurement attribute of fair value with assistance of valuation professionals, thus improving the quality of accounting information; for valuation; for valuation industry, valuation institutes can widen their business field by serving accounting, in which way the industry are able to help itself out from the difficulties it has been facing for long time.With the development of modern accounting, there are higher requirements for the quality of financial information. Under this backdrop, fair value becomes increasingly important for accounting. As fair value is gradually applied substantially in accounting standards worldwide, demand for valuation based on financial reporting purposes explodes. In this situation, for accounting, it is meaningful and necessary to have deep research on the so-called Valuation for Financial Reporting. Especially, some fundamental theoretical problems must be solved, such as, on what basis can valuation result be used in accounting, and in which way can the value types of valuation be linked to accounting measurement attributes. These theoretical researches are important for further "Fair Value Reform" in domestic accounting system, which are decisive for further improving the quality of financial information in our nation.Meaning while, the development of modern valuation largely expands the scope of serving objects of valuation. In China, as the ownership reform in state-owned enterprises gradually drop the curtain, the whole Chinese valuation industry is discarded to face the crisis that the volume of business sharply shrinks. Under such background, it has become an agreement that the whole valuation industry must make great effort on developing business based on financial reporting purposes. That’s to say, it is important for the whole Chinese valuation industry to immediately launch systematic theoretical and practical researches on this new type of valuation-valuation for financial reporting,In this paper, the author firstly introduces basic information about valuation for financial reporting, on that basis the following theoretical and practical researches can be better understood by readers. In the theoretical research part, the author makes a comparative study between market value of valuation and fair value of accounting, and reach to the conclusion that these two concepts can be perfectly connected. Based on this conclusion, the author makes it clear that theoretically, valuation is capable of serving accounting measurements. Afterwards, the author does some further research on the differences between valuation for financial reporting and traditional valuation. In the practical research part, the author chooses three typical business types of valuation for financial reporting (namely, valuation for assets impairment tests, valuation for corporation merging cost allocation, and valuation for investment real estate), with separate analysis of specific difficulties lying in relevant practices, the author accordingly gives solutions. As a summary of previous theoretical and practical researches, the ending part of his paper is comprised of some institutional suggestions intending to offer references to the further development of valuation for financial reporting in our nation.Possible contributions of this paper mainly can be described as follows: Firstly, in the theoretical research on valuation for financial reporting, the author successfully finds out the very value type of valuation that can be perfectly linked to value attributes system of accounting measurements, as a clear conclusion this paper pointed out that it is the market value that can be used in valuation for financial reporting, matching the specific requirement of accounting measurements. This conclusion is subjected to remove theoretical barriers previously existed impeding valuation to serve for accounting measurements. Secondly, in the practical research part, the author separated analyzes three valuation businesses purposed at financial reporting that can be frequently seen in Chinese valuation practices, in which the author not only pointed some practical difficulties and mistakes, but also accordingly give solutions. It is believed that those practical researches to some extent will contribute to further development of relevant valuation practices in China.