Comment letter on Conceptual Framework for Financial Reporting(Exposure Draft ED/2015/3)

Dear IASB：

I am writing this letter to provide some personal opinions and suggestions for Conceptual Framework for Financial Reporting Exposure Draft.

Since I haven’t finished reading all the chapters of the Conceptual Framework for Financial Reporting(draft) and the Basis for Conclusions(draft). The following contents are only related to parts of the Exposure Draft.

Chapter 4-The elements of financial statements.

4.51 Income and expenses include amounts generated by transactions and other events, including changes in the carrying amount of assets and liabilities.

I do agree that income and expenses are defined in terms of changes in assets and liabilities. But I think it is showing the all-inclusive concept to define income and expenses when there is no distinction between normal and abnormal business. I personally prefer to use current operating concept and all-inclusive concept comprehensively. So I think distinguishing between normal and abnormal operationswhen defining income and expenses will improve the qualitative characteristics of useful financial information such like relevance and comparability.

Chapter 6- Measurement

6.4 Measurement bases can be categorized as……

I strongly agree with that cash-flow-based measures be identified as techniques used in estimating a cost-based measure or a current measure so the measurement basis can be categorized as historical cost and current value.

6.48-6.73Factors to consider when selecting a measurement basis

These sections are about factors to consider when selecting a measurement basis.I basically agree with the comments. But which need to add is as below:

(1)It is also important to consider the cost and benefit when selecting a measurement basis. For instance, when the investment real estate market prices rise or fall fast (in my country, that is to double in half a year), it is difficult to get the market price for a specified time. Also sometimes we evaluate the property by professional third parties. All this reasons may increase the cost to use current value basis. We, in turn, consider the benefit of providing such information, it is difficult to measure. So this may need to use professional judgment to consider the benefit.

(2)I personally suggest that IFRS should make clear rules of which method should beused in particular cases as clear as possible, since using current value measurement basis will make companies have a greater opportunity to manipulatetheir profit and lose, and this is the situation that the SEC does not want to see. For instance, when we use current value measurement basis, it does not mean that measures must be perfectly accurate in all respects. Both observable price and unobservable price may have a floating space. The unobservable price may float because of the estimating process and the estimating input .The observable price between different market participants may be float because of different judgments to the market, and the float space may reach 10% or more. A company on the loss line with a large number of properties of real estate can easily change the financial statements to a profit by usingthe higher prices for valuation.

So I think measurement basis for the same business could be different in different countries or under different economic conditions. For example, in most countries,the real estate prices are relatively stable, and regulatory environment is relatively good, it is more appropriate to use the current price measurement basis. In other countries, which may have serious asset bubbles or may have poor regulatory environment, using current price measurement basis may not be appropriate.

Anyway, IFRS should give clear rules for choosing measurement basis although that may be very complicated to do so.

(3)I think there is a simple way to select a measurement basis, which is to use both historical cost basis and current value basis. We can use one measurement basis in the statement of financial position and the statement of financial performance while disclose additional information using the other one in the notes of the financial report.

Some suggestions

There are many countries in the world which are consideringto comply with IFRS in the future, so I think it is important for IASB to investigate in these countries and understand the real situation of these countries when developing IFRS.

Hope mycommentwill be helpful.

Yours sincerely

Fangwei Lin

2015.11.24