In a joint submission CA ANZ and CPA Australia have supported the IASB’s work to address the diversity that occurs in practice when business combinations occur between entities that are all controlled by the same ultimate entity (referred to as ‘business combinations under common control’ or BCUCC for short).

Such combinations are a common and material occurrence within groups in Australia, New Zealand and overseas and are not within the scope of IFRS 3 Business Combinations. As a result, accounting for such transactions has required significant and unnecessary extra cost and effort, which has also resulted in considerable diversity in practice.

In our view the proposals set out in the IASB discussion paper provide a clear and logical framework for accounting for a variety of such BCUCC, reducing the cost and effort in accounting for BCUCC, improving comparability and consistency of financial reporting, and providing more useful information to users of financial statements. 

However, the submission does identify some areas where further refinement is needed, including the practical application of the proposed ‘book-value method’, additional scope suggestions and some recommendations for improved terminology.