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Business Combinations under Common Control


IASB research project


In 2012, the IASB added the Business Combinations under Common Control ('BCUCC') project to its research agenda. BCUCC are excluded from the scope of IFRS 3 Business Combinations and the lack of authoritative accounting guidance has created diversity in financial reporting practice.

During 2014-2016, the IASB staff conducted several research and outreach activities to better understand the current practice to account for BCUCC.

In 2016, the IASB decided that the scope of the project should include transactions under common control in which the reporting entity obtains control of one or more businesses, regardless of whether IFRS 3 Business Combinations would identify the reporting entity as the acquirer. The focus of the project is how to account for a BCUCC in the financial statements of the receiving entity.

Currently, the IASB has taken the approach to complement the acquisition method as set out in IFRS 3 and apply it to BCUCC that affect the non-controlling shareholders in the receiving entity (subject to some cost-benefit considerations). In all other cases, a book-value method is to be used. Furthermore, the IASB has tentatively decided to prescribe how a book-value method is to be applied. The tentative proposals on the project include disclosure requirements for when the acquisition and when a book-value method is applied to BCUCC.

The IASB is planning to publish a discussion paper at the end of November 2020 with a comment period of 270 days.


History - EFRAG proactive work


A working group was set-up by EFRAG in co-operation with the OIC (Organismo Italiano di Contabilita - Italian Standard Setter) in order to develop a discussion paper to stimulate debate at an early stage in the standard setting process. 

The Discussion Paper Accounting for Business Combinations under Common Control (the DP) represented EFRAG's and the OIC's first step in their BCUCC project. The scope of the DP was limited to BCUCC in the consolidated financial statements of the acquirer. The DP was issued in October 2011, with a comment deadline 30 April 2012. The DP is available here.

Comment letters were received from respondents within and outside Europe, which demonstrated the importance of, and interest in, this initiative. 

In addition, EFRAG together with a number of National Standard Setters, organised four outreach events in Europe. The consolidated feedback on those events can be found here.  

After considering the comments received on the DP, EFRAG and the OIC issued in December 2012 a feedback statement on the DP presenting the analysis of comment letters received, together with EFRAG's and the OIC's responses to the issues raised by respondents. The feedback on the comments is available here.

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