Direction of standard emerges for accounting for businesses under common control

The diversity in accounting treatment for transactions involving businesses under common control is in the IASB spotlight. Adam Deller explains what’s happening

How are businesses under common control currently accounted for?

Using IFRS 10

No IFRS guidance exists currently

Using IAS 27

Using IFRS 3

If a subsidiary within a group acquires another entity from outside of the group, how should this be accounted for in the consolidated financial statements?

Using IFRS 3

Under IAS 16

Under IFRS 9

Under the principles being discussed in the BCUCC project

Which of these describes the alternative treatment to the acquisition method which is currently used in accounting for BCUCC?

The historical method

The cost method

The amortised cost method

The predecessor method

Which, if any, of the following situations would be BCUCC? Statement 1 - Entity A acquires entity B from company P, which owns both A and B, or Statement 2 - Entity A acquires entity C from entity B. Company P owns both entities A and B

Statement 2 only

Both statements

Neither statement

Statement 1 only

Which of the following is a proposed method for accounting for BCUCC?

Net present value

Fixed cost

Current value

None of the above

Under the predecessor method, how should an excess of consideration over net asset be recorded?

As a distribution from equity

As a revaluation surplus

As goodwill

It will not be recognised

Which of the following outlines the proposed way forward for the project?

None of the above

Current value is to be recommended for all BCUCC

The existing treatment is to remain

Current value is to be recommended for entities with substantial NCI

Which, if any, of the following statements is correct? Statement 1 - There is currently no guidance from accounting companies on BCUCC, or Statement 2 - BCUCC only arise when new entities are formed

Neither statement is correct

Statement 2 only is correct

Both statements are correct

Statement 1 only is correct

Why is the current value approach not being proposed across all BCUCC?

It is being proposed across all BCUCC

The predecessor method results in more up to date information

The cost constraints will outweigh the potential benefits

It would be impossible to assess current value in some cases

Which, if any, of the following statements is/are true? Statement 1 - The IASB is looking at qualitative measures in assessing how significant the NCI is, or Statement 2 - The IASB is looking at quantitative measures in assessing how significant the NCI is