IFRS 3 Business Combinations currently governs reporting requirements for acquisitions. However, the standard lacks specificity on how to report transactions involving transfers of businesses between companies under common control.

In response to this reporting gap, the IASB released a discussion paper in November 2020, presenting its preliminary views on addressing the issue with the goal of enhancing transparency and comparability in reporting these transactions while reducing practice diversity.

The project summary clarifies the reasoning behind the board’s decision, made in November 2023, not to proceed with developing reporting requirements for BCUCCs.

Acknowledging the existing diversity in reporting practices surrounding BCUCCs, the IASB noted feedback from investors indicating their ability to navigate this diversity effectively. The information sought by investors varies significantly across jurisdictions, posing a challenge to the development of globally applicable reporting standards tailored to meet diverse user needs.

Moreover, the IASB’s research indicated that while potential enhancements to financial reporting could arise from the development of BCUCC reporting requirements, the associated costs of implementing such changes would likely outweigh the benefits.

The project summary published today, therefore, concludes the project. Please see the press release and the project summary on the IFRS Foun­da­tion website.