Background
Accounting for combinations under common control
The Board received stakeholder comments that there are concerns over how much of Section 1582, Business Combinations, can be used as paragraph 1582.02(b) specifically scopes out combinations between entities or businesses under common control. The Board also heard the requirement in paragraph 3840.44(b) to retrospectively restate the comparatives can be more onerous than accounting for these business combinations at the exchange amount. The Board proposes to amend Section 3840, Related Party Transactions, to address these issues.
Accounting for financial instruments acquired in a combination under common control
In early 2022, the Board received stakeholder comments that how Sections 3840, Related Party Transactions, and Section 3856, Financial Instruments, interact for common control combinations is unclear. Stakeholders questioned whether financial assets acquired or financial liabilities assumed in a transaction when a business is transferred between two enterprises under common control should be measured using the principles in paragraph 3840.44 or in Section 3856. The Board was advised that the principles in paragraph 3840.44 more appropriately reflect the economics of a common control transaction, especially when the acquirer records the acquired assets and liabilities at their carrying amount. The Board proposes to amend Sections 3840 and 3856 to make this clarification.