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Business Combinations – Phase II

Date recorded:

The Board discussed various convergence issues.

The Board agreed that in respect of transitional provisions for minority interests held by the entity that were previously controlled the standard should apply on a retrospective basis to:

  • The classification and presentation of these minority interests.
  • Accounting for decreases, before the effective date of the proposed standard, in a parent's controlling interest in a subsidiary without losing control in that subsidiary: any such losses previously recognised in profit or loss would be reclassified directly to equity.
  • Accounting for losses, before the effective date of the proposed standard, that were attributable to minority interests but which exceeded the carrying amount of those interests: any such losses would be reclassified to the minority interests.

The Board agreed that the following should apply on a prospective basis:

  • Accounting for a parent's retained ownership in a subsidiary that was disposed of before the effective date of the proposed standard.
  • Accounting for acquisitions of minority interests before the effective date of the proposed standard.

The Board previously agreed that deferred tax assets that subsequently met the recognition criteria should be recognised as an adjustment to goodwill. The FASB concluded in these circumstances the adjustment should go to the income statement unless it occurred within one year after the acquisition date and does not relate to a discrete event or circumstance that occurred after the acquisition date and that could not have been foreseen at the acquisition date. The Board agreed to move to the FASB approach.

Correction list for hyphenation

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