The Accounting Standards Board (AcSB) consulted with stakeholders about its priorities for domestic standards as per its 2017-2018 Annual Plan. During its consultations, the AcSB conducted a stakeholder survey.
The results of the survey identified Section 3840, Related Party Transactions in Part II of the Handbook as a high priority. A number of stakeholders identified accounting for related party combinations as an area of concern.
The AcSB is, therefore, engaging in a research project to better understand the different types of related party combinations undertaken by private enterprises and not-for-profit organizations.
Through consultations, the AcSB heard that the guidance in paragraph 44 of Section 3840 is unclear and often causes challenges in practice.
Stakeholders also questioned whether financial instruments acquired or 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 Section 3856.
The AcSB proposes to amend Section 3840 to address accounting for:
a) a combination between enterprises or businesses under common control; and
b) financial assets acquired or financial liabilities assumed in a combination between enterprises or businesses under common control.