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Questioning the Ability of the Discussion Paper Business Combinations under Common Control in Improving Decision Usefulness

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  • Aziz El Barnoussi
  • Ferdy van Beest

Abstract

This paper makes a number of observations on the International Accounting Standards Board's Discussion Paper DP/2020/2 Business Combinations under Common Control. We address issues associated with the approach for applying acquisition accounting and discuss the practicality of the proposed criteria. We question the ability of this new DP to contribute to either decision usefulness or comparability in the presence of non‐controlling shareholders. We also address issues related to cost–benefit considerations and (unintended) earnings management opportunities, and propose some adjustments to properly reflect economic substance.

Suggested Citation

  • Aziz El Barnoussi & Ferdy van Beest, 2022. "Questioning the Ability of the Discussion Paper Business Combinations under Common Control in Improving Decision Usefulness," Australian Accounting Review, CPA Australia, vol. 32(2), pages 214-219, June.
    • Handle: RePEc:bla:ausact:v:32:y:2022:i:2:p:214-219
    DOI: 10.1111/auar.12360
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    References listed on IDEAS

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    1. Aboody, David & Barth, Mary E. & Kasznik, Ron, 1999. "Revaluations of fixed assets and future firm performance: Evidence from the UK1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 149-178, January.
    2. Mattias Hamberg & Mari Paananen & Jiri Novak, 2011. "The Adoption of IFRS 3: The Effects of Managerial Discretion and Stock Market Reactions," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 263-288.
    3. Ann Tarca, 2021. "Business Combinations under Common Control: Filling a Gap in IFRS Standards," Australian Accounting Review, CPA Australia, vol. 31(4), pages 321-327, December.
    4. Kasznik, Ron & Aboody, David & Williams, Michael, 2000. "Purchase versus Pooling in Stock-for-Stock Acquisitions: Why Do Firms Care?," Research Papers 1614, Stanford University, Graduate School of Business.
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