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

By | 2017-12-22T14:57:27+00:00 December 22nd, 2017|

Onesti Tiziano, Romano Mauro, Taliento Marco/ Financial ReportingRiviste / Fascicolo: 1-2015


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. […]

Keywords: Common control, consolidation, financial reporting, acquisition accounting, fresh start, predecessor basis, pooling of interests, IAS/IFRS


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Acquisition-type or merger-type accounting? Further insights on transactions involving businesses governed by the same party(-ies)

By | 2017-12-22T14:47:04+00:00 December 22nd, 2017|

Onesti Tiziano, Romano Mauro, Taliento Marco/ Financial ReportingRiviste / Fascicolo: 2-2015


This paper – aiming at encouraging a fruitful debate – intends to highlight the discontinuous evolution of the accounting solutions explored by notable bodies (Efrag-Oic, Iasb, Fasb, Kasb, etc.) with reference to transactions involving businesses under common control. The work finally recompose them in two basic categories (discussing their pros/cons as well), here analyzed: acquisition-type accounting, which emphasizes fair value (emergence of exchange or current amounts) vs. merger-type accounting, linked to historical costs (continuity values approach). The first cluster includes the pure-acquisition and the fresh-start method, whereas the second the predecessor basis and the pooling of interests techniques. The concrete identification of the proper methodology, in this regard, essentially requires the profound understanding of the underlying economics, architecture and key elements of a specific transaction shedding light on the most relevant and reliable information useful to stakeholders.

Keywords: Common control, consolidation, financial reporting, acquisition accounting, fresh start, predecessor basis, pooling of interests, IAS/IFRS


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