What Is Fair Value Adjustment?

Fair value: In financial terms, it refers to the value of goods and goods that are traded in an open, active market, and is acceptable to both buyers and sellers. Sometimes it is not necessarily the true intrinsic value of the goods, which is related to market demand. Such as stocks, futures market trading performance is obvious.

Changes in fair value

Changes in fair value: due to market factors such as changes in demand, the change in the value of the product itself results in a process of re-evaluation of the price between the buyer and the seller; changes in the fair value between the two before and after

(1) Upon initial recognition, an accounting enterprise is classified as a financial asset or financial liability that is measured at fair value and whose changes are included in the current profit and loss (including transactional financial assets or financial liabilities and directly designated as measured at fair value and which Changes in financial assets or financial liabilities included in the current profit and loss) and investment real estate for subsequent measurement in a fair manner.

(2) Detailed accounting shall be carried out in accordance with transaction financial assets and transaction financial liabilities.

(III) Main accounting treatment of gains and losses from changes in fair value

On the balance sheet date, the enterprise should debit the "Transactional financial assets-changes in fair value", "Investment real estate-Changes in fair value" as the difference between the fair value of the tradable financial assets and its book balance. Make a note of the account; the difference between the fair value and its book balance is the opposite accounting entry.

When selling transactional financial assets, debit "bank deposits" and other subjects based on the actual amount received, and credit "transactional financial assets-changes in costs and fair values" according to their book balances. The balance of the "Fair Gains and Losses" account is debited or credited to the subject, and credited or debited to the "investment income" account. When disposing of investment real estate that is subsequently measured in a fair manner, debit "bank deposits" and other credits based on the amount received, and credit "investment real estatecosts, changes in fair value". At the same time, according to the balance of the "trading financial assets-changes in fair value", debit or credit the undergraduate subjects, or credit or debit the "investment income" subjects. At the same time, according to the balance of "fair value change gains and losses", debit or credit undergraduate subjects, or credit or debit "other business costs" subjects.

(4) At the end of the period, the balance of the subject should be transferred to the "profit of the year" subject, and there will be no balance in the subject after the carryover.

(V) Changes in the fair value of available-for-sale financial assets should be included in "other comprehensive income" and are not accounted for in this account.