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Business Combinations under Common Control – International Accounting Standards Board

Date recorded:

At its meeting on December 11-12, 2019, the IASB met to discuss how the receiving entity in a business combination under common control should apply a current value approach based on the acquisition method set out in IFRS 3. The Board tentatively decided:

  1. to require the receiving entity to recognize any excess fair value of the acquired identifiable net assets over the fair value of the consideration transferred as an increase in the receiving entity’s equity (contribution), and not as a gain on a bargain purchase in the statement of profit or loss;
  2. not to require the receiving entity to identify, measure and recognize a distribution.

The Board will discuss at a future meeting what information about the transaction price the receiving entity should provide in the notes to its financial statements to help users assess whether the fair value of the consideration transferred exceeds the fair value of the acquired interest. At future meetings, the Board will discuss how a predecessor approach should be applied and what information should be provided in the notes to the financial statements.

Review the IASB Update and podcast on the Board's Web site.

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