Social Sciences in China (Chinese Edition)

No.3, 2017

 

The Dilemma of International Accounting Standards and Improvements to Financial Statements: From the Perspective of Marx’s Fictitious Capital Theory

(Abstract)

 

Zhou Hua, Dai Deming, Liu Junhai and Ye Jianming

 

Since the outbreak of the subprime mortgage crisis in America, international accounting standards have attracted strong criticism for their serious procyclical effects. Under these standards, financial statements’mixed presentation of accounting data and financial analysis data has greatly weakened their public interest role. An analysis using Marx’s theory of fictitious capital indicates that both assets impairment accounting and fair value accounting have their defects. For the proper solution of the problem of how an enterprise’s financial statements can observe domestic law and simultaneously give consideration to international convergence, one feasible measure for financial statements is to adhere to the principle of “keeping accounts in accordance with the legal facts”; adopt the method of “historical cost accounting plus fair value disclosure”; and distinguish between legal facts and financial expectations.