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

Journal title FINANCIAL REPORTING
Author/s Raffaele Fiume, Tiziano Onesti, Mauro Romano, Marco Taliento
Publishing Year 2015 Issue 2015/1
Language English Pages 20 P. 107-126 File size 233 KB
DOI 10.3280/FR2015-001005
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

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.

  1. Epstein B.J. and Jermakowicz E.K. (2011), Interpretation and Application of International Accounting and Financial Reporting Standards. (New York: John Wiley & Sons).
  2. Ernst & Young (2010), International GAAP 2010. (London: John Wiley).
  3. AICPA (1970-1973), Accounting Interpretation 27: “Entities under Common Control in a Business Combination”. (New York).
  4. AICPA (1970-1973), Accounting Interpretation 39: “Transfers and Exchanges between Companies under Common Control”. (New York).
  5. Amaduzzi A. (1953), L’Azienda, nel suo sistema e nell’ordine delle sue rilevazioni. (Torino: Utet).
  6. Anthony N.R. (1983), Tell it like it was: a conceptual framework for financial accounting. (Chicago: Richard D. Irwin).
  7. Benston G.J., Bromwich M. and Wagenhofer A. (2006), Principles- Versus Rules-Based Accounting Standards: The FASB’s Standard Setting Strategy, Abacus, 42 (2), DOI: 10.1111/j.1467-6281.2006.00196.x
  8. Biancone P.P. (2013), Business Combinations Under Common Control (BCUCC): The Italian Experience, GSTF Business Review, March, 2 (3).
  9. Biondi Y. (2010), Should Merger Accounting Be Reconsidered? Proceedings of the 7th International Accounting Conference (AACF), MODAV 2010, October 14-15, Istanbul.
  10. CASC (2006), Report of Activities – 2006 China Japan Korea Accounting Standard Setters Meeting, 30-31 August, Seoul. Chandler A. (1997), The Visible Hand: the Managerial Revolution in American
  11. Business. (Cambridge, Mass.: Belknap Press).
  12. Coase R.H. (1988), The Firm, the Market and the State. (Chicago, University of Chicago Press).
  13. Conner K.R. and Prahalad C.K. (1996). A Resource-based Theory of the Firm: Knowledge vs. Opportunism, Organization Science, 7, DOI: 10.1287/orsc.7.5.477
  14. Deloitte (2010), A roadmap to Accounting for Business Combinations and Related Topics. (London: LLP).
  15. EFRAG (2009), The Needs of Users of Financial Information – A User Survey. (Brussels).
  16. EFRAG-OIC (2011), Discussion Paper – Accounting for Business Combinations Under Common Control. (Brussels).
  17. EFRAG-OIC (2012), Feedback Statement – Accounting for Business Combinations Under Common Control. (Brussels).
  18. Eigen M.M. (1965). Is Pooling Really Necessary?, The Accounting Review, 40 (3).
  19. FASB (2007), Statement of Financial Accounting Standards (SFAS) 141 Business Combinations. (Norwalk).
  20. FASB (2007), Accounting Standards Codification Topic 805 Business Combinations. (Norwalk).
  21. Foss N.J. and Klein P.G. (2005), The Theory of the Firm and Its Critics: A Stocktaking and Assessment. Druid WP, 05-03, DOI: 10.2139/ssrn.695484
  22. Franco A. (2006), Le operazioni di riorganizzazione infragruppo: profili contabili alla luce dei principi contabili internazionali, Rivista dei Dottori Commercialisti, 1.
  23. G4 + 1 (1999), Methods of Accounting for Business Combinations: Recommendations of the G4+1 for achieving Convergence. (Toronto: G4 + 1).
  24. Hong Kong Institute of CPA (2008), Merger Accounting for Common Control Combinations. (Hong Kong).
  25. IASC (1998), G4+1 Position Paper: recommendations for achieving convergence on the methods of accounting for business combinations. (London).
  26. IASB (2003), IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors. (London).
  27. IASB (2008), IFRS 3 – Business Combinations. (London).
  28. KPMG (2010), Insights into IFRS. (London: Thomson).
  29. KASB (2012), Transactions under Common Control. Fourth IASB Emerging Economies Group meeting, December, Sao Paulo, Brazil.
  30. Madhok A. (1996), The Organization of Economic Activity: Transaction Costs, Firm Capabilities, and the Nature of Governance, Organization Science, 7, DOI: 10.1287/orsc.7.5.577
  31. Muller V.O. (2011), Academic research on group accounting over the past fifty years, International Academy of Business and Economics Audience, 11 (1). Nelson R. and Winter S. (1985), An Evolutionary Theory of the Economic Change. (Belknap Press).
  32. Nobes C. and Parker R. (2008), Comparative International Accounting. (Boston:
  33. Prentice Hall).
  34. OIC (2007), OIC n. 4 – Fusione e Scissione. (Rome).
  35. Onesti T., Romano M. and Taliento M. (2015), Acquisition or merger-type accounting? Further insights on transactions involving businesses governed by the same party(-ies). WP, University of Roma Tre and Foggia (forthcoming).
  36. Phillips L.C. (1965), Accounting for Business Combinations, Accounting Review, April, 40 (2).
  37. PWC (2010), The IFRS Manual of Accounting. (London: CCH).
  38. Ramanna K. (2008), The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting, Journal of Accounting and Economics, 45, DOI: 10.1016/j.jacceco.2007.11.006
  39. VV.AA. (2005), Applying International Accounting Standards. (Milton: Wiley).
  40. Wells M. (2011), Framework-based teaching of principle-based standards, Accounting Education: An international journal, 20 (4).
  41. Williamson O.E. (1989), Transaction Cost Economics, Handbook of Industrial Organization, I, DOI: 10.1016/S1573-448X(89)01006-X
  42. Zappa G. (1957), Le produzioni nell’economia delle imprese. (Milano: Giuffrè).

  • What Is the Way Forward for IASB’s Research Programme under the Evidence-Supported Approach? Some Analyses and Comments Based on the 2015 Agenda Consultation Jacqueline Birt, Niclas Hellman, Ann Jorissen, Stephani Mason, Mari Paananen, in Accounting in Europe /2016 pp.269
    DOI: 10.1080/17449480.2016.1208834
  • The complexity in measuring M&A performance: Is a multi-dimensional approach enough? Elisa Roncagliolo, Francesco Avallone, in FINANCIAL REPORTING 1/2021 pp.89
    DOI: 10.3280/FR2021-001004

Raffaele Fiume, Tiziano Onesti, Mauro Romano, Marco Taliento, Dialogue with standard setters. Business Combinations under Common Control: Concerns, Criticisms and Strides in "FINANCIAL REPORTING" 1/2015, pp 107-126, DOI: 10.3280/FR2015-001005