Common control transactions

Background

This project is designed to address accounting for transactions between entities that are ultimately controlled by the same party or parties (so-called 'common control transactions').

The scope of the project is expected to include business combinations of entities under common control which currently are excluded from the scope of IFRS 3 Business Combinations.

Specifically, the scope of the project is:

  • Define what a common control transaction is
  • Include demergers and spin offs
  • Consider accounting in both the separate and consolidated financial statements.

Current status of the project

The IASB added this project to its agenda at its December 2007 meeting.  There have been no IASB deliberations to date and the project is on hold pending the outcome of the IASB's inaugural three-year agenda consultation.

However, the IFRS Interpretations Committee has considered numerous issues related to common control transactions, often declining to add these matters to its agenda in favour of referring it to the IASB for consideration as part of this project.  This page also includes these discussions for reference purposes.

Project milestones

DateDevelopmentComments
December 2007 Added to the IASB's agenda

Related Discussions

  • IFRS 3 — Business combinations involving newly formed entities: business combinations under common control

  • Sep 08, 2011

  • The Interpretations Committee received a request for guidance on accounting for common control transactions. More specifically, the submission describes a fact pattern that illustrates a type of common control transaction in which the parent company (Entity A), which is wholly owned by Shareholder A, transfers a business (Business A) to a new entity (referred to as ‘Newco’) also wholly owned by Shareholder A.

  • IAS 27 — Group organisations in separate financial statements

  • Sep 08, 2011

  • The Interpretations Committee received a request asking for clarification of whether paragraphs 38B and 38C of IAS 27 (amended 2008) or paragraphs 13 and 14 of IAS 27 (revised 2011) apply either directly or by analogy to reorganisations of groups that result in the new intermediate parent having more than one direct subsidiary.

  • IAS 27 – Group reorganisations in separate financial statements (new)

  • Jul 07, 2011

  • The IFRS Interpretations Committee received a request for clarification on how entities that are established as new intermediate parents within a group determine the cost of their investments in subsidiaries when they account for these investments in their separate financial statements at cost under IAS 27.

  • IFRS 3 – Business combinations under common control (new)

  • Jul 07, 2011

  • The IFRS Interpretations Committee considered a request for guidance on business combinations under common control involving a fact pattern that illustrated a type of a common control transaction in which an entity transfers a business into a new entity ("Newco").

  • IAS 27 — Combined financial statements and redefining the reporting entity

  • Jan 07, 2010

  • The IFRIC received a request for guidance on whether a reporting entity may, in accordance with IFRSs, present financial statements that include a selection of entities that are under common control, rather than being restricted to a parent/subsidiary relationship as defined by IAS 27. The IFRIC also received a request for guidance on whether a reporting entity may, in accordance with IFRSs, be redefined to exclude from comparative periods entities/businesses that have been carved-out of a group.

  • Agenda Proposals

  • Dec 12, 2007

  • The staff presented the Board with four agenda proposals. They are (1) intangibles, (2) emissions trading and government grants, (3) common control transactions, and (4) management commentary.

All Related