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UK Endorsement Board publishes final comment letter on the IASB’s DP/2020/2 Business Combinations under Common Control

  • UK Endorsement Board (UKEB) Image

06 Sep 2021

The UK Endorsement Board (UKEB) has published its final comment letter and feedback statement on the International Accounting Standard Board’s (IASB's) Discussion Paper DP2020/02 Business Combinations under Common Control ("BCUCC").

In its final comment letter the UK Endorsement Board supports the proposals in the discussion paper and indicate that the proposals will provide users of financial statements with information on BCUCC which it calls a 'significant step forward from the minimal information required today'.

In particular, the UK Endorsement Board expect the proposals in the Discussion Paper will lead to improvements over current financial reporting as follows:

  • Measurement and disclosure requirements in the DP will reduce diversity in accounting practice, improve transparency and lead to greater comparability between financial statements.
  • The proportionate approach, whereby the book value method is required in situations where non-controlling shareholders are not affected, will reduce complexity and cost for preparers.

The final comment letter recommends that:

  • entities that qualify for the book value method should have an option to use the acquisition method; and
  • when considering the valuations to use for the book value method, the values recorded by the parent or “seller” company should also be permitted if they provide more relevant information.

Additionally, whilst supporting in principle the non-controlling shareholder exemption from using acquisition accounting, the UKEB indicates that there may be practical issues with its application.

The final comment letter and the feedback statement are available on the UKEB website.

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