Fair value is also called fair market value and fair price.

The price determined by familiar buyers and sellers under fair dealing conditions, or the transaction price at which an asset can be bought and sold between unrelated parties under fair dealing conditions.

Under fair value measurement, assets and liabilities are measured at the amount that would voluntarily exchange assets or pay off debts between two parties familiar with the situation in an arm's length transaction.

The purchasing enterprise's recording of the combined business requires the use of fair value information.

In practice, an asset appraisal agency usually evaluates the net assets of the merged enterprise.

The secondary market is a trading place for securities.

The secondary market is the circulation market of securities and a place where issued securities are bought and sold.

Expenditure expenditure refers to the expenditure included in the current profit and loss, and capitalized expenditure refers to the expenditure included in the cost of fixed assets. Capitalization is recorded in the enterprise capital after completion, usually fixed assets. Expenditure means directly recorded in the current profit and loss, which will reduce the current period's profit and loss.

Profit. For example, for long-term loan interest specifically for a project under construction, the interest before the completion of the project should be capitalized, and the interest after completion should be expensed. When the interest is paid, "Project under construction" will be debited and credited.

"Bank deposits" are expensed interest processing. When paying interest, "Financial expenses" are debited and "Bank deposits" are credited. The biggest difference between expensed expenditures and capitalized expenditures is whether the expenditures increase the book value of fixed assets. If not,

If it increases, it is an expensed expenditure; if it can be increased, it is a capitalized expenditure.

For example, in terms of repair costs, if it is minor repairs, routine maintenance, etc., it will not increase the value of fixed assets, so it is usually treated as expenses, while major repairs, replacement of major components, etc. will significantly increase the value of fixed assets and

If it has a useful life, it is usually capitalized, and at least long-term deferred expenses must be recorded.

Amortized cost The amortized cost of a financial asset or financial liability refers to the initial recognition amount of the financial asset or financial liability after the following adjustments: (1) Deduction of the repaid principal; (2) Plus or minus

The accumulated amortization amount is formed by amortizing the difference between the initial recognition amount and the maturity amount using the actual interest rate; (3) Deducting the impairment losses that have occurred (only applicable to financial assets).

Amortized cost is the cost of the investment minus the interest, using the actual interest rate as the basis for calculating interest.

Ending amortized cost = Beginning amortized cost + investment income - interest receivable - principal recovered - impairment loss incurred. The amortized cost is actually equivalent to the book value of the investment held to maturity****

*****Generally, amortized cost is equal to its book value, but there are two special cases: (1) Financial assets measured at fair value.

For financial assets measured at fair value such as available-for-sale financial assets, if there is only a temporary decline in fair value, then when calculating the amortized cost of available-for-sale financial assets, the amount of the detailed account of changes in fair value does not need to be considered. In this case,

Amortized cost is not equal to book value.

(2) Loan.

For loans that have already made provision for losses, the amortized cost is not equal to the book value, because the amortized cost is plus the interest receivable and uncollected.

Reclassification of held-to-maturity investments into available-for-sale financial assets Debit: Available-for-export financial assets (fair value on the day) Capital reserve - other capital reserves (difference) Credit: Held-to-maturity investments - cost,

Interest adjustment, accrued interest capital reserve - other capital reserve (difference) The opening amortized cost of available-for-sale financial assets is to find the present value investment income of principal receivable and interest receivable = opening amortized cost × actual interest rate

According to Articles 32 and 33 of the "New Standards", the subsequent measurement of investments, loans and accounts receivable held to maturity, and financial liabilities that meet the provisions of Article 33 shall adopt the actual interest rate method.

Measured at amortized cost.

The formula of amortized cost is: amortized cost = initial recognition amount – principal repaid – accumulated amortization – impairment loss (or irrecoverable amount).

The formula of the actual interest rate is: actual interest rate = the interest rate that discounts future contract cash flows into the initial recognition amount.

Example 1: Assume that Dahua Co., Ltd. purchased the five-year bond issued by Huakai Company on January 1, 2005 on January 2, 2005 and held it until maturity. The coupon rate is 14% and the face value of the bond is 1,000 yuan.

The company purchased 100 copies at a price of 105,359 yuan and paid the relevant transaction fee of 2,000 yuan.

The bond pays interest on June 30 and December 31 of each year, and repays the principal and pays the last interest in the last year.

When calculating the actual interest rate, the number of interest payments and principal and interest cash flow discount should be used, that is, "bond face value + bond premium (or minus bond discount) = discounted value of principal receivable at maturity + bond interest collected in each period

"Discounted value" can be calculated using the "insertion method".

According to the above formula, tested at an interest rate of 12%: Principal: 100 000 × 0.55839 (n = 10, i = 6%) = 55 839 Interest: 7 000 × 7.36 (annuity: n = 10, i = 6%) =

51 520 Total present value of principal and interest 107 359 The present value of principal and interest is exactly equal to the investment cost, indicating that the actual interest rate is 12%.