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In the article 'Business Combinations under Common Control: Filling a Gap in IFRS Standards', published in Australian Accounting Review1, International Accounting Standards Board (Board) Member Ann Tarca explains the Board’s preliminary views for accounting for business combinations under common control, an issue not currently addressed in IFRS Standards. Such combinations are widespread and the accounting for them is diverse. The Board’s preliminary views aim to reduce diversity in practice and to improve the information provided to investors so they can understand the effects of these transactions and compare companies that undertake them.

The Australian Accounting Review also features two additional articles relating to business combinations under common control (BCUCC):

  • Business Combinations under Common Control: A Controlling Entity Cost Approach2 discusses the controlling entity’s perspective in a BCUCC and suggests some issues for the Board to consider in its redeliberations of its preliminary views. This paper explains the use of a book-value approach in practice—specifically by listed companies and pre-listing IPO candidates in Hong Kong—the relevance of the controlling entity perspective and the importance of pre-combination information to users of the financial statements.
  • Business Combinations under Common Control: Further Considerations3 discusses the choice of the controlling party or transferred business book values, the principles and objectives of the Discussion Paper and the relationship with related party disclosures.

Comment letters submitted to the Board are available here. The consultation period closed 1 September 2021. The Board will consider the feedback provided by respondents before deciding whether to develop an exposure draft containing proposals to implement any or all of its preliminary views.

1Tarca, A. (2021). ‘Business Combinations under Common Control: Filling a Gap in IFRS Standards’, Australian Accounting Review, 31 (4), 328-331.

2Seah-Tan, S. (2021). ‘Business Combinations under Common Control: A Controlling Entity Cost Approach’, Australian Accounting Review, 31 (4), 321-327.

3Bradbury, M.E. (2021). ‘Business Combinations under Common Control: Further considerations’, Australian Accounting Review, 31 (4), 332-335.

Followable tags

IFRS Accounting Standards development
IFRS 3 Business Combinations