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Accounting for Real Property Investment
The current issue and full text archive of this journal is available at www.emeraldinsight.com/0951-3574.htm

AAAJ 23,8

Adaptability to fair value accounting in an emerging economy
A case study of China’s IFRS convergence
Songlan Peng
York University, Toronto, Canada, and

982
Received 28 July 2008 Revised 6 January 2010 Accepted 15 March 2010

Kathryn Bewley
Ryerson University, Toronto, Canada
Abstract
Purpose – This paper seeks to assess the feasibility and desirability of a major emerging economy adopting and implementing fair value accounting (FVA), as codified in the International Financial Reporting Standards (IFRS), by studying China’s recent experience. Design/methodology/approach – The paper examines the extent of FVA adoption in China’s new accounting standards (“2007GAAP”), reasons for differences from the International Accounting Standard Board’s IFRS, and how 2007GAAP has been implemented in practice. Data are obtained from content analyses of IFRS and 2007GAAP FVA requirements, critical assessments of standard setters’ official statements, and analyses of empirical evidence from official reports, media, and academic research. Findings – The authors find a high degree of adoption of IFRS FVA standards in China’s 2007GAAP for financial instruments, but many differences for non-financial long-term asset investments. Standard setters justify this divergence by fundamental characteristics of the Chinese environment. The resulting differences from IFRS in the 2007GAAP FVA standards, and in their implementation, challenge official claims of “substantial convergence” between 2007GAAP and IFRS. Hence, the benefits desired by Chinese regulators from adopting FVA and international accounting convergence to IFRS may not be realized. Research limitations/implications – The findings are derived from aggregated data in government reports. These findings can be extended in future research by examining specific implementation outcomes in company financial


References: AAAJ 23,8 Journal of Accountancy (2007), “Simplifying global accounting: IASB chair discusses the future of IFRS, US GAAP and the global accounting profession”, Journal of Accountancy, Vol
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