Abstract: Since 2007, China's listed companies have adopted new accounting standards to prepare annual accounting reports. Due to the wide introduction of the fair value measurement model in the new accounting standards, it has had an important impact on the accounting information of listed companies' annual reports in debt restructuring, exchange of non-monetary assets, recognition and measurement of investment real estate and financial instruments. On the basis of introducing the meaning of fair value, this paper analyzes the influence of the adoption of fair value measurement mode on the accounting information of the annual report, and points out some related problems that investors should pay attention to when reading the accounting information of the annual report. Keywords: fair value; Accounting information; Related issues 1. The meaning of fair value and its theoretical basis Fair value, also known as fair market price and fair price, refers to the price determined by buyers and sellers who are familiar with the situation under the condition of fair trade, or the transaction price at which an asset can be bought and sold by unrelated parties under the condition of fair trade. Fair value is one of the products of the development of market economy. In the past 30 years of reform and opening up, China's market economy has developed rapidly and its economic system has become increasingly perfect, which has already met the objective conditions for using the fair value measurement model; At the same time, with the continuous development of the capital security market and the increasingly active trading of financial derivatives, some complex transactions cannot be accurately measured under the traditional cost measurement model, and the measurement results seriously affect the relevance of accounting information. Because under the cost measurement mode, the market changes of some accounting items or capital transactions can not be reflected in time and reliably, and can not provide useful information for accounting information users outside the enterprise, which greatly limits the ability of accounting information users to make decision analysis. Therefore, it is more and more urgent to use fair value to measure some special matters, and the concept of decision usefulness has become the theoretical basis for using fair value measurement model. Second, the impact of fair value measurement mode on the accounting information of listed companies' annual reports According to the "Disclosure of Basic Information in the 2007 Annual Report and the First Quarter Report of 2008" issued by Shanghai Stock Exchange, as of April 30, 2008, among the 863 listed companies in Shanghai, except for nine shares, the remaining 862 listed companies disclosed their annual reports in 2007, and the net profit attributable to shareholders of listed companies reached 873.2 billion yuan. Compared with 2006, it increased by 45.86%, and the weighted average earnings per share and return on equity of listed companies were 0.4439 yuan and 16.3% respectively, while in 2006, the weighted average earnings per share and return on equity were 0.25 1 1 yuan and1.. * * * There are 72 loss-making listed companies, accounting for 8.35% of the total number of companies that have disclosed annual reports, while the loss ratio in 2006 was 1 1.8%. According to the data of Shenzhen Stock Exchange, as of April 30, 2008, except for *ST David, there were 487 main board companies in Shenzhen that disclosed their 2007 annual reports on time. The main board company in Shenzhen, which has disclosed its annual report, realized a net profit of 104874 billion yuan, a year-on-year increase of116.46%; The average net profit of each household is 2150,000 yuan; After deducting non-recurring gains and losses, the net profit was 87.236 billion yuan, a year-on-year increase of 65,438+006.72%; The weighted average earnings per share was 0.4 1 yuan, a year-on-year increase of 96.09%; The weighted average return on equity was 65,438+03.39%, up 5.65,438+05 percentage points year-on-year. In 2007, the net profit of 369 main board companies in Shenzhen increased, while that of 1 16 companies decreased. There are 47 loss-making companies, with a loss of 9.65%, which is 5.86 percentage points lower than the 2006 annual report; The loss amounted to 7.692 billion yuan, down 53.87% year-on-year. In the summary data of 2007 annual report released by Shanghai and Shenzhen stock markets, both cities draw the conclusion that the overall performance and earnings per share of listed companies have increased substantially, while the proportion of loss-making companies has decreased. According to the author's preliminary analysis, the disclosure in the first quarter of 2008 basically reflected this feature. The annual and quarterly reports of listed companies have achieved remarkable results. In addition to the good overall economic situation of the country and the positive achievements made by listed companies themselves, the author believes that the implementation of the new accounting standards has also played a considerable role, especially the adoption of the fair value measurement model has played an "immediate" effect on profit growth. The introduction of fair value measurement model and its adoption in the preparation of annual reports have caused violent fluctuations in the net profit and net assets of listed companies. In particular, those companies that are heavily in debt and unable to repay their debts, once exempted in whole or in part, their earnings will be directly reflected in the current income statement, which may greatly improve their earnings per share. After the implementation of the new accounting standards, the adoption of the fair value measurement model has a growing impact on the accounting information of listed companies' annual reports, mainly in the following aspects: 1. Fair value measurement of financial instruments and its influence. In the new accounting standards, financial instruments are the most widely and deeply used in fair value. According to the Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments, financial instruments measured at fair value mainly include financial assets and financial liabilities. Financial assets mainly include the following four categories: (1) financial assets measured at fair value and whose changes are included in current profits and losses, including trading financial assets and financial assets designated as measured at fair value and whose changes are included in current profits and losses; (2) held-to-maturity investment; (3) Loans and receivables; (4) Financial assets available for sale. Financial liabilities include the following two categories: (1) financial liabilities measured at fair value and whose changes are included in current profits and losses, including trading financial liabilities and financial liabilities designated as measured at fair value and whose changes are included in current profits and losses; (2) Other financial liabilities. For example, listed companies buy stocks, bonds and funds from the secondary market in order to make full use of temporarily idle funds and earn the difference; For another example, listed companies do not use derivatives as effective hedging tools, such as forward contracts, futures contracts, swaps, options and so on. In addition, for the purpose of risk management or eliminating the inconsistency between accounting recognition and measurement of financial assets or financial liabilities, listed companies directly designate some financial assets or financial liabilities to be measured at fair value. The reported value of these financial instruments classified as fair value measurement is market value, and the market value fluctuates, and its changes are directly included in the current profit and loss. From the 2007 annual report, it can be found that many listed companies have financial instruments that should be measured at fair value and their changes are included in the current profits and losses, and the book amount of financial instruments will fluctuate with the changes of their fair values. Therefore, if these listed companies can better grasp the securities market and development trend, their performance will increase with the increase of "fair value change profit and loss"; On the contrary, if the judgment of listed companies is wrong and their investment strategies are inconsistent with the market situation, their current profits will decline. 2. Fair value measurement of investment real estate and its influence. The investment real estate mentioned in Accounting Standards for Business Enterprises No.3-Investment Real Estate refers to the real estate held by an enterprise that can be separately measured and sold to earn rent or capital appreciation, or both, mainly including the leased land use right, the land use right held and transferred after being prepared for appreciation, and the leased buildings. This criterion provides two alternative measurement modes for enterprise investment real estate: cost mode and fair value mode. Listed companies can choose to adopt cost measurement mode or fair value measurement mode. If the listed company adopts the cost measurement model, the investment real estate can be depreciated or amortized according to the fixed assets standards and intangible assets standards, and the impairment test will be conducted at the end of the period, and the corresponding impairment reserve will be accrued. If there is conclusive evidence that its fair value can be obtained continuously and reliably, the enterprise can adopt the fair value measurement model, but the following conditions should be met at the same time when adopting the fair value measurement model: (1) There is an active real estate trading market where the investment real estate is located; (2) Enterprises can obtain information such as the market price of similar or similar real estate from the real estate trading market, so as to make a reasonable estimate of the fair value of investment real estate. If the listed company adopts the fair value measurement model, on the one hand, because the investment real estate is not depreciated or amortized, it will reduce the expenses of each period and increase profits, thus further affecting the income tax and cash flow of the listed company; On the other hand, the fluctuation of real estate fair value will directly affect the current profit and loss through the "fair value change profit and loss". From the disclosure of the annual report in 2007, many companies chose the cost measurement model. If there is a big gap between the actual value and the cost value of the investment real estate measured by the cost model, if the company changes to the fair value model, it will greatly increase the book value of the company's assets and affect the net assets and net profit of the listed company in the subsequent period. 3. The application and influence of fair value in debt restructuring. Debt restructuring refers to the matter that creditors make concessions according to the agreement reached with the debtor or the court's ruling when the debtor has financial difficulties. According to the new accounting standards, the debtor should take the difference between the book value of restructured debt and the fair value of cash, non-cash assets, transferred shares or the book value of restructured debt as non-operating income (debt restructuring income). The new accounting standards also stipulate that the difference between the fair value of non-cash assets and their book values should also be treated as follows according to different situations: if the non-cash assets are inventories, they should be treated as sales and the income should be recognized according to their fair values; Non-cash assets are fixed assets and intangible assets, and the difference between their fair value and book value is included in non-operating income or non-operating expenses; If the non-cash assets are long-term equity investments, the difference between their fair value and book value shall be included in the investment income. If the fair value of non-monetary assets used by listed companies to pay off debts in debt restructuring is higher than their book value, the higher part together with the debt exemption obtained can increase the current profits. When a listed company carries out debt restructuring, not only the difference between the paid consideration and the debt can be included in the current profit and loss, but also the difference between the fair value of the paid non-cash assets and their book value can be included in the profit and loss. In this way, those companies with poor performance or serious debt burden may increase their current profits through debt restructuring, thus playing the game of "crows become phoenixes". Of course, due to the one-off characteristics of debt restructuring income, it belongs to non-recurring gains and losses and is not sustainable. Therefore, it is impossible for listed companies to play this game often. 4. The application and influence of fair value in the exchange of non-monetary assets. The exchange of non-monetary assets refers to the exchange of non-monetary assets such as inventory, fixed assets, intangible assets and long-term equity investment, and sometimes involves a small amount of monetary assets (that is, premium). According to the new accounting standards, when exchanging assets, if there is commercial substance and the fair value can be measured reliably, the difference between the fair value and book value of the exchanged assets should be included in the current profit and loss, and the difference between the fair value and book value of the exchanged assets should be treated according to different situations, and the treatment method is basically the same as that under the debt restructuring method. For the exchange of non-monetary assets between listed companies with commercial essence, the fair value measurement of the exchanged and exchanged assets is essentially to confirm that the difference between the fair value and the book value of the non-monetary assets of listed companies is the income realized by the enterprise. 5. The application and influence of fair value in business combination under different control. According to the new accounting standards, if a merger is absorbed in a business combination not under the same control, the difference between the confirmed business combination cost and the fair value share of the identifiable net assets of the acquiree will be recognized as goodwill, and the difference between the confirmed business combination cost and the fair value share of the identifiable net assets of the acquiree will be included in the current profit and loss; In the case of holding merger, the difference between the merger cost and the fair value share of the identifiable net assets of the acquiree obtained in the merger shall be recognized as goodwill in the consolidated balance sheet, and the difference between the merger cost and the fair value share of the identifiable net assets of the acquiree obtained in the merger shall be adjusted by the parent company in the consolidated balance sheet on the purchase date. As can be seen from the above, the merger of listed companies under different control, due to the application of fair value, either affects the assets of listed companies, or affects the current profits and losses or owners' equity of listed companies. In addition to the above five aspects, there are other accounting items and businesses that can be measured by the fair value measurement model. According to incomplete statistics, in the new accounting standards system, at least 17 of the 38 specific standards that have been promulgated use the fair value measurement attribute to varying degrees. Iii. Relevant issues that should be paid attention to when reading the accounting information of the annual report 1. Comparison of accounting information quality of annual report after adopting fair value measurement model. The reason why the new accounting standards adopt the fair value measurement model for some transactions or events is mainly to implement the principle that substance is more important than form, overcome the defect of underestimating the asset value of enterprises because of adopting the cost pricing model, and reflect the asset value and operating performance of enterprises more truly. After adopting the fair value measurement model, on the whole, the application of fair value improves the relevance of accounting information of listed companies, reflects the value of company assets and liabilities at a certain point in time, and improves the quality of accounting information compared with before; On the other hand, investors should also see that due to the changes of external financial environment, industry policies, emergencies and other factors, the fluctuation of fair value reduces the reliability of accounting information in annual reports and affects the quality of accounting information. Moreover, specific matters such as debt restructuring and non-monetary transactions are basically one-off or accidental events, which belong to the category of non-recurring gains and losses and are not sustainable. When analyzing the annual report, investors need to focus on the impact of the application of fair value on the annual report information. 2. Investors should know something about the fair value measurement model. With the gradual implementation and promotion of new accounting standards and the emergence of new accounting items in capital security market, the decision-making usefulness of accounting information is increasingly demanding, and the fair value will inevitably be more widely reflected in the periodic reports of listed companies. As a qualified investor, we need to gradually adapt to, understand and be familiar with the connotation of fair value and the impact of adopting this measurement model on the valuation of listed companies. Especially when the investment targets are listed companies involved in debt restructuring, joint-stock banks, joint-stock brokers and mutual shareholding, investors should know some knowledge about fair value, otherwise it may lead to investment decision-making mistakes. 3. Correctly treat and rationally analyze the profit and loss indicators in the annual report. After the implementation of the new accounting standards, some changes have taken place in the previous accounting treatment methods, and some gains that could not be included in profits in the past can now be included. These changes have brought convenience for some companies to whitewash their statements to some extent, so the valuation method system of listed companies has also changed greatly. Therefore, it is necessary for us to remind investors that when reading the annual report and evaluating the investment value of listed companies, we should not simply consider how much the performance has increased, but should deeply analyze the company's fundamentals and growth, and pay attention to the impact of debt restructuring, non-monetary assets exchange, financial instruments and investment real estate on the profits of listed companies. In addition to the main business income, total profit, net profit, earnings per share, return on net assets and other indicators, we should also pay attention to cash flow and basic earnings per share after deducting non-operating gains and losses, so as to identify some listed companies that use the new accounting standards to regulate their performance purposefully and pay more attention to the growth and sustainable development of listed companies. References: 1. Liu Jinhui. Application Analysis of Fair Value of New Accounting Standards [J]. Accountant, 2008(4). 2. Gedi. Fair Value: Problems and Countermeasures [J]. Friends of Accounting, 2007(4).