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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.

The project is expected to:

  • identify the common features of different types of group restructurings and reorganisations
  • consider when an entity should use the previous carrying amounts of a transferred subsidiary and when it should use new amounts ('fresh start accounting' based on a measure of current value)
  • potentially also consider the related topic of when new values of assets in an acquired subsidiary should be 'pushed down' to the subsidiary.

Note: 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.

 

Current status of the project

The IASB added this project to its agenda at its December 2007 meeting but there were no deliberations.  In December 2012, as part of its response to the Agenda consultation 2011, the IASB formally reactivated this project as an IASB-only research project.

Project milestones

DateDevelopmentComments
December 2007 Added to the IASB's agenda
December 2012 Reactivated as an IASB-only research project Discussion Paper to be published before an agenda decision is made

Related Discussions

  • IFRS 2 — Timing of the recognition of intercompany recharges

  • May 14, 2013

  • The Interpretations Committee received a request for clarification about IFRS 2 'Share-based Payment' relating to intragroup recharges made in respect of share-based payments, specifically whether the subsidiary’s liability to its parent in respect of these charges should be recognised from the date of grant of the award or at the date of exercise of the award in various circumstances.

  • IAS 28 and IFRS 3 — Associates and common control

  • May 14, 2013

  • The Interpretations Committee received a request seeking clarification of the accounting for an acquisition of an interest in an associate or joint venture from an entity under common control.

  • IFRS 2 — Timing of recognition of intercompany recharges

  • Jan 22, 2013

  • The IFRS Interpretations Committee considered a request for clarification relating to the accounting for intragroup recharges made in respect of share-based transactions, tentatively deciding not to add the item to its agenda.

  • 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 07, 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.