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

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.

WHAT DETERMINES THE APPLICATION OF IFRS 3 IN ACCOUNTING FOR GOODWILL?

Accounting treatment of goodwill is often described as one of the most complex and controversial topics in the field of financial reporting, so it is of primary interest to examine the factors that affect application of IFRS 3 in Serbia given the low quality of financial reporting in developing countries to which Serbia belongs. Paper results show low quality of financial reporting on domestic business combinations which is an indicator to professional and regulatory bodies that there is significant room for improvement in this field. Research findings also show that: type of audit firm, the country of origin in which ultimate owner of an acquirer operates, legal form of an acquirer and finally transaction size play an important role in determining whether an acquirer will apply IFRS 3 when it comes to accounting for goodwill. Besides that paper reveals that materiality of goodwill is of significantly lower magnitude in domestic transactions than in transactions realized in developed European economies, but that the average percentage of consideration transferred allocated to goodwill is almost identical which implies that on average domestic and European M&As are equally motivated by the acquisition of goodwill as of the acquisition of identifiable net assets.

What is hiding behind the money accumulating in Utah?

Taking up the geographer's task of following and defetishizing the commodity, this research taps into the United States (US) federal banking data to locate the commodity “money”. Law is used to specify money's locations. Relative to the size of its economy, Utah's banks report a lopsided share of US money. This paper unmasks important social relations embedded in the money commodities located in Utah's banks by tracing the history of US banking law, which has played a leading role in the processes responsible for Utah's outsized share of the sub-national monetary landscape. Banking law determined the scope and type of business in which banking firms and their corporate affiliates could engage. Throughout the 20th century, investment banks and commercial firms struggled to claim legal rights to engage in business combinations once deemed illegal: combining non-banking business with a commercial bank. The state of Utah, in coordination with financial and commercial firms, has expanded the legal and financial space of Industrial Loan Banks (ILBs), historically idiosyncratic chartered banks exempt from regulations separating banking firms from non-banking business. Utah marketed their banking charters to global, systemically important financial institutions and large commercial conglomerates, which then established or acquired ILB subsidiaries within the state. From Utah, the die had been cast: the largest non-banking firms on the planet were now legally empowered to accumulate capital in ways that had heretofore been forbidden at other locations. American banking had been transformed.