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

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.