Questioning the Ability of the Discussion Paper Business Combinations under Common Control in Improving Decision Usefulness

2021 ◽  
Author(s):  
Aziz El Barnoussi ◽  
Ferdy van Beest
Keyword(s):  
Discussion Paper ◽  
Business Combinations ◽  
Decision Usefulness ◽  
Common Control

scholarly journals Business Combinations under Common Control: The Gain/loss Group Perspective. What the IASB Project Leaves Unaddressed

2021 ◽  
Vol 16 (11) ◽  
pp. 59
Author(s):  
Francesco Bellandi
Keyword(s):  
Financial Statements ◽  
Parent Company ◽  
Discussion Paper ◽  
Business Combinations ◽  
Common Control ◽  
Gain Loss ◽  
Real Practice ◽  
Theoretical Apparatus

Although BCUCCs are widespread, a clear treatment is missing under IFRS. Most contributions have taken partial views. This article innovatively provides a systematic theoretical apparatus of the role accounting plays for all the affected members of a group, with a focus on gain or loss opportunities below the consolidated statements. The method used is international technical accounting analysis under IFRS and U.S. GAAP. It shows how a BCUCC may be driven to achieve gain/loss in separate financial statements and how cross-company consistency in policies and substance may reveal gain/loss arbitrage; the interaction of principles for disposals, demergers, and business combinations; and the position of sub-holdings, which in real practice is more relevant than the ultimate parent company. This paper is timely, as the IASB has recently published a Discussion Paper. The IASB project fails to give answers to these points as it only looks at the receiving entity and consolidated statements.

OBJECTIVES OF FINANCIAL REPORTING, ABORIGINAL COST, AND POOLING OF INTERESTS ACCOUNTING

2012 ◽  
Vol 39 (2) ◽  
pp. 45-80 ◽  
Author(s):  
Hugo Nurnberg
Keyword(s):  
Public Policy ◽  
Financial Reporting ◽  
Information Needs ◽  
Public Utility ◽  
Financial Reports ◽  
Policy Makers ◽  
Business Combinations ◽  
Decision Usefulness ◽  
Rate Base ◽  
Utility Rate

ABSTRACT Through the years, pooling of interest accounting was criticized as contrary to the decision usefulness objective of financial reporting and potentially misleading to stockholders and creditors, the assumed principal users of financial reports. This paper does not dispute those criticisms. It demonstrates, however, that there were some very good reasons for permitting pooling accounting for certain business combinations when the method was developed in the 1940s. At that time, the basic objectives of financial accounting encompassed stewardship and decision usefulness for multiple users, including public utility regulators and public policy makers. Pooling accounting developed in part to satisfy the information needs of public utility regulators who favored aboriginal (original historical) cost to determine the utility rate base; additionally, it was favored by public policy makers who sought lower utility rates (prices) to foster social and economic goals.

scholarly journals Business combinations under common control

2021 ◽  
Vol 2021 (3) ◽  
Author(s):  
Adéla Schrecková
Keyword(s):  
Business Combinations ◽  
Common Control

Dialogue with standard setters. Business Combinations under Common Control: Concerns, Criticisms and Strides

2015 ◽  
pp. 107-126 ◽  
Author(s):  
Raffaele Fiume ◽  
Tiziano Onesti ◽  
Mauro Romano ◽  
Marco Taliento
Keyword(s):  
Capital Market ◽  
Business Combinations ◽  
Common Control ◽  
The World ◽  
Before And After

Although excluded from the scope of IFRS 3, business combinations under common control (BCUCCs) are widespread transactions that take place all over the world in different forms, often as a reorganization or restructuring among related parties. These transactions occur when entities are ultimately - not transiently - controlled by the same party/ies before and after the combination (which is neither a capital market nor an arm's length transaction and devoid of economic substance: indeed, no change of control is entailed). The scarce and fragmentary literature, not to mention the lack of clear consensus on the topic, contributes to the prevailing concerns on how to account for BCUCCs. In this complex context, the purpose of this work is to assess the possible and various accounting methods and identify the most suitable, accredited and consistent techniques.

Evidence on the Decision Usefulness of Fair Values in Business Combinations

2020 ◽  
Author(s):  
James Blann ◽  
John L. Campbell ◽  
Jonathan E. Shipman ◽  
Zac Wiebe
Keyword(s):  
Business Combinations ◽  
Decision Usefulness
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