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Business Combinations under Common Control


​In 2012, the IASB added the project Business Combinations under Common Control ('BCUCC') to its research agenda. BCUCC are currently excluded from the scope of IFRS 3 Business Combinations. The absence of a specifically applicable IFRS Standard created diversity in practice in preparing financial statements.

From 2014 to 2016, the IASB staff conducted several research and outreach activities to better understand the accounting practice 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 project is focused on how to account for a BCUCC in the financial statements of the receiving entity. The objective of the IASB's project on BCUCC is to explore possible reporting requirements for BCUCC in order to reduce diversity in practice, improve transparency of the reporting entity and provide relevant and comparable information to users of financial statements.

The IASB published the discussion paper on 30 November 2020 with a comment period of 270 days and a comment deadline on 1 September 2021.

EFRAG Comment Letter

In its comment letter, EFRAG welcomes the Discussion Paper Business Combinations under Common Control (BCUCC) and expresses cautious support for the proposed approach to select the measurement method. 

EFRAG considers that the scope of the project should be extended to include how to measure investments in subsidiaries in the separate financial statements. EFRAG observes that all other transactions under common control are important and need to be discussed in a future comprehensive project. EFRAG also makes further suggestions on defining the scope in order to ensure the appropriate application of the IASB’s proposals.

EFRAG’s consultation and outreach resulted in mixed views regarding recognition as a contribution to equity of the excess fair value of the identifiable net assets over the consideration paid when applying the acquisition method to BCUCC transactions. Consequently, EFRAG suggests the IASB to further explore the possible approaches in order to provide relevant information to users of financial statements. 

When applying a book-value method, EFRAG proposes two accounting policy options to allow the use of the carrying amounts in the consolidated financial statements of the transferred company’s controlling party and to provide pre-combination information retrospectively. 

Finally, in its comment letter, EFRAG makes a number of recommendations to improve the IASB’s proposals.

​EFRAG's comment letter can be found ​here.

History - EFRAG proactive work in 2011

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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