BDO submits comment letter to IASB on Discussion Paper 2020/2 Business Combinations under Common Control

BDO has submitted a comment letter to the IASB on Discussion Paper 2020/2 Business Combinations under Common Control (BCUCC).

BDO has expressed agreement with the IASB’s preliminary view on the requirement to develop proposals covering transfers of businesses under common control. The comment letter supports the use of acquisition method if the receiving company’s shares are traded in a public market. It further agrees with the optional exemption from the acquisition method and that the receiving company should be required to use the book value method if all its non-controlling shareholders are related parties.

The comment letter does not agree with the recognition of goodwill in case of an ‘overpay’ in a BCUCC. The comment letter further expresses a view that when book value method is applied, the book values used should be based on the ultimate parent’s consolidated financial statements and not based on the transferred company’s financial statements. The comment letter also disagrees with the Board’s view that when applying a book value method, the receiving company should not restate comparative information.

The comment letter may be accessed here.