EFRAG publishes draft comment letter on IASB’s Discussion Paper DP/2020/2 Business Combinations under Common Control

​​EFRAG has published its draft comment letter​ in response to the IASB's Discussion Paper DP/2020/2 Business Combinations under Common Control (BCUCC).

EFRAG has supported the proposed scope of the Discussion Paper; however, EFRAG considers that the IASB should better define 'group restructurings' without labelling them BCUCC when they do not meet the description of a business combination in IFRS 3 Business Combinations.

Regarding selection of the measurement method, EFRAG agrees that a single measurement method is not appropriate for all BCUCC. However, EFRAG has proposed a few modifications to the IASB’s decision tree on when to apply each method, on which it is consulting constituents.

EFRAG is further consulting constituents on the alternative treatments to be followed when the consideration paid is lower than the net identifiable assets in the business combination. It is also consulting constituents on measurement of assets and liabilities received when applying book-value method. 

Comments on the draft Comment Letter are requested by 30 July 2021. The draft Comment Letter may be accessed here and a summary of EFRAG’s preliminary position on the DP may be accessed here.