Business Combination under Common Control

Date recorded:

Cover paper (Agenda Paper 23)

The IASB published Discussion Paper DP/2020/2 Business Combinations under Common Control (BCUCC) in November 2020, with a comment letter deadline of 1 September 2021. In previous meetings, the IASB discussed the feedback received on the topics set out in the DP, the plan for deliberating the preliminary view, and the overall project scope. The IASB also discussed its preliminary views set out in the DP on selecting the measurement method to apply to a BCUCC.

The purpose of this session was for the IASB to discuss the project direction and the measurement method to apply to a BCUCC.

The IASB was not asked to make any decisions during this session.

Project direction (Agenda Paper 23A)


This paper considered the project direction for the project on BCUCC.  

Options for project direction

This paper set out three options for the project direction.

  • Option I—develop recognition, measurement and disclosure requirements
  • Option II—develop disclosure-only requirements
  • Option III—develop no recognition, measurement or disclosure requirements

For simplicity, the paper assumed the same option is selected for all workstreams. However, it would be possible to choose different options for different workstreams—for example, the IASB could choose to only require disclosure of which measurement method an entity applies but develop recognition and measurement requirements for how to apply the measurement methods.

Next steps

The staff will gather more information to help the IASB make an informed decision on the project direction. The staff planned to consult the Emerging Economies Group (EEG), the Accounting Standards Advisory Forum (ASAF), the Capital Markets Advisory Committee (CMAC) and the Global Preparers Forum (GPF) at their upcoming meetings. The questions may include how prevalent BCUCCs are in members’ jurisdictions, including the proportion that affect or do not affect non-controlling shareholders (NCS).

At a future IASB meeting, the staff will present the feedback from the consultative groups and the updated analysis and recommendation for project direction.

IASB discussion

Some IASB members agreed that the project should focus on developing recognition, measurement, and disclosure requirements (Option I) first because this topic has been on the IASB’s agenda for a while. Thereafter the project should consider whether to develop disclosure only requirements (Option II). Whilst some IASB members believe that the staff should first understand from the investors whether the diversity in practice for how preparers account for the BCUCC transaction affect their decisions because this would inform the project direction. Some IASB members believe that the staff should focus on engaging with regulators to understand if this project is considered high priority compared to all other projects on the IASB’s agenda. Many IASB members believe it would not be helpful to consult further with groups such as ASAF or CMAC as these working groups do not frequently deal with BCUCC transactions. Some IASB members believe it is important to distinguish between business combination versus a restructuring transaction. Overall, IASB members asked the staff to perform further focused research in order to inform the project direction.

Project direction—Book value method (Agenda Paper 23B)


Agenda Paper 23A noted that there is diversity in how a book-value method is applied to BCUCC. This paper outlined two areas of diversity—which book values to use and whether to restate pre-combination information—which the IASB would need to consider if it develops recognition and measurement requirements for BCUCCs (see Option I in Agenda Paper 23A). The DP acknowledged arguments for different approaches for these areas and respondents’ feedback was split.

In the context of considering the project direction, questions arose about the extent of resources required to develop recognition and measurement requirements for a single, specified book-value method and the merits of developing recognition and measurement requirements for a single book-value method.  

IASB discussion

Some IASB members believe this paper is a helpful reminder on why the pre-combination information about the transferred business could be useful. However, many IASB members asked the staff to understand from the investors if and what type of fair value information would be useful.

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