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KASB publishes paper on business combinations under common control

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16 Apr 2013

The Korean Accounting Standards Board (KASB) has published a research report on business combinations under common control, such as group restructures or reorganisations.

The report includes discussion of:

  • The current accounting for business combinations under common control (BCUCC) under International Financial Reporting Standards (IFRS), United States Generally Accepted Accounting Principles (US-GAAP) and Korean GAAP
  • The KASB's involvement in the progressing research and other developments in the accounting for BCUCC
  • Empirical evidence of accounting for BCUCC in Korea
  • The appropriate accounting for BCUCC, including detailed analysis of the European Financial Reporting Advisory Group (EFRAG) and Organismo Italiano di Contabilità (OIC) Discussion Paper Accounting for Business Combinations under Common Control published in October 2011.

The report notes that the predecessor basis of accounting is commonly used in the Korean context to account for BCUCC.  It suggests that utilising the 'hierarchy' in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to develop an accounting policy for BCUCC (which may lead to the application of IFRS 3 Business Combinations by analogy) is not appropriate for such transactions under IFRS. It also encourages the IASB to advance its project on common control.  In December 2012, the IASB formally reactivated this project as an IASB-only research project as part of its response to the Agenda consultation 2011.

The research report is available on the KASB website.

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