IFRS Newsbrief: Updates on IASB’s project about Business combination under common control

The current International Financial Reporting Standards (IFRS) do not provide specific guidance on how to account for business combinations involving companies controlled by the same party. As a result, companies report on these combinations in different ways, leading to inconsistencies in financial statements. This diversity in practice poses challenges for users in understanding the impact of such combinations and comparing companies engaged in similar transactions.

Recognising the need to address this issue, the International Accounting Standards Board (IASB) conducted research and published a discussion paper in 2020, seeking to explore potential reporting requirements that could reduce the variability in practice and enhance transparency and comparability in reporting on these combinations.

However, in November 2023, after its consideration, the IASB has decided not to proceed with the development of specific reporting requirements for business combinations under common control. Entities having this type of transaction would need to continue to assess and select the most appropriate accounting policy to be used.