Business Combinations—Disclosures, Goodwill and Impairment

The IASB met on 23 February 2023 to discuss its project on Business Combinations—Disclosures, Goodwill and Impairment. In particular, the IASB discussed a management approach to disclosing information about the subsequent performance of business combinations.

The management approach (Agenda Paper 18A)

The IASB tentatively decided:

1. to specify a level of management within an entity to identify the information the entity is required to disclose about the subsequent performance of business combinations; and
2. to describe that level of management as the key management personnel of the reporting entity, as defined in IAS 24 Related Party Disclosures.

All 12 IASB members agreed with these decisions.

Other aspects of the management approach (Agenda Paper 18B)

The IASB tentatively decided:

1. to maintain its preliminary view that an entity be required to disclose information about the subsequent performance of a business combination for as long as the entity’s management continues to monitor whether the objectives of the business combination are being met (that is, the entity’s management compares actual performance with the entity’s objectives and targets for the business combination it established when entering into the business combination).
2. to maintain its preliminary view that if an entity’s management does not monitor whether its objectives for a business combination are being met, the entity should disclose that fact and the reasons why it does not do so.
3. to maintain its preliminary view that if an entity’s management stops monitoring, before the end of the second full year after the year of the business combination, whether its objectives for a business combination are being met, the entity should disclose that fact and the reasons why it has done so.
4. to propose that an entity whose management stops monitoring, before the end of the second full year after the year of the business combination, whether its objectives for a business combination are being met, be required to disclose information about actual performance. The entity will be required to disclose information using the metric set out in the year of acquisition, if (and only if) information about actual performance using that metric is being received by the entity’s management.
5. to permit an entity to disclose information about its targets for a business combination as a range or a point estimate.
6. to clarify that an entity will be required to disclose only information about its key objectives—that is, the objectives critical to the success of the business combination.

All 12 IASB members agreed with these decisions.

The IASB tentatively decided not to proceed with its preliminary view relating to the information that an entity would be required to disclose if it changed the metric its management uses to monitor whether the objectives for the business combination are being met.

Seven of 12 IASB members agreed with this decision.