The EACB welcomes the Board’s efforts to set up reporting requirements for a receiving company that would provide users of its financial statements with transparent information about combinations that are outside the scope of IFRS 3 Business Combinations. In particular, we support the IASB’s intention to reduce diversity in reporting practices in order to ensure more relevant and comparable information about business combinations under common control.
However, the EACB disagrees with the Board’s preliminary conclusions stating that “the acquisition method should be applied to business combinations under common control that affect non-controlling shareholders of the receiving company”. While we agree that non-controlling shareholders of the receiving company may be affected by the combinations as they acquire an ownership interest in the economic resources of the transferred company, we find it disproportionate to require the application of the acquisition method on this single criterion.
Instead, we support the application of the book-value method in most cases of the business combinations under common control.