Business Combinations under Common Control

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IFRS 3 Business Combinations requires the acquisition method for business combinations but does not address business combinations under common control as this is scoped out.


Stakeholders asked the IASB to address this gap in IFRS 3 as it has led to diversity in practice. The IASB issued Discussion Paper – Business Combinations under Common Control in November 2020 and is seeking feedback on its preliminary views until September 1, 2021. The proposal focuses on filling the gap in IFRS 3 for transfers of businesses under common control.


The proposals aim to:

  • determine which method (acquisition method vs. book-value method) should be applied so that companies undertaking similar transactions would apply the same accounting policies; and
  • address disclosures and financial reporting of these transactions so they will become more transparent and more comparable.

IFRS 3 Business Combinations requires the acquisition method for business combinations but does not address business combinations under common control as this is scoped out.


Stakeholders asked the IASB to address this gap in IFRS 3 as it has led to diversity in practice. The IASB issued Discussion Paper – Business Combinations under Common Control in November 2020 and is seeking feedback on its preliminary views until September 1, 2021. The proposal focuses on filling the gap in IFRS 3 for transfers of businesses under common control.


The proposals aim to:

  • determine which method (acquisition method vs. book-value method) should be applied so that companies undertaking similar transactions would apply the same accounting policies; and
  • address disclosures and financial reporting of these transactions so they will become more transparent and more comparable.
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