Response 1 - Association of Chartered Certified Accountants

Deadline for completion of this Invitation to Comment: Close of business 30 June 2021

Please submit to: [email protected]

Introduction

The objective of this Invitation to Comment is to obtain input from stakeholders on the draft comment letter on the IASB's DP/2020/2 Business Combinations Under Common Control.

Who should respond to this Invitation to Comment?

Stakeholders with an interest in the quality of accounts that apply IFRS.

How to respond to this Invitation to Comment

Please download this document, answer any questions on which you would like to provide views, and return to [email protected] by close of business on 30 June 2021.

Brief responses providing views on individual questions are welcome, as well as comprehensive responses to all questions.

The UK Endorsement Board

Following the UK's exit from the European Union, the Department for Business, Energy and Industrial Strategy (BEIS) has set up the UK Endorsement Board (UKEB) to fulfil statutory functions of influencing the development and subsequent adoption of International Accounting Standards for use in the UK. This Invitation to Comment forms part of those influencing activities and is intended to contribute to the International Accounting Standards Board's (IASB) due process. The views expressed by the UKEB secretariat in this document are separate from, and will not necessarily affect the conclusions in, any endorsement and adoption assessment on new or amended International Accounting Standards to be provided to the Secretary of State or the UKEB, once powers have been delegated.

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Questions

1Do you think an accounting policy choice should be made available such that those who qualify for the book value method can elect to use the acquisition method where they consider that appropriate to their circumstances? (Draft comment letter, appendix 1, paragraph A3). Please explain why or why not.

We support an option for a company to choose the acquisition method. This would seem only to apply to the related party exception where book values are proposed to be compulsory. We recognise that options may undermine comparability, but we consider the acquisition method to be the most appropriate treatment and so should always be available. Related parties are potentially a wide group and some may rely on general purpose financial statements as they may not enjoy access to other information as the IASB contend.

2Do you agree with the IASB's proposed non-controlling shareholder exemption for private companies? (Draft comment letter, appendix 1, paragraph A6). If not is there an alternative you would recommend?

We note that the condition of consent by non-controlling shareholders may raise practical issues, but agree with the principle.

3The acquisition method will apply when non-controlling shareholders are affected by the BCUCC. In these circumstances do you agree that where consideration paid is greater than the fair value of the assets and liabilities acquired the difference should be treated as goodwill, and not as a distribution from equity? (Draft comment letter, appendix 1, paragraph A10). Please explain why or why not.

Agree.

4Do you have any other comments you would like to make on the IASB proposals or the UKEB Draft Comment Letter?

The discussion paper does not cover sufficiently the question of book values of assets that might be used. Could these be based on national GAAP for example?

Thank you for completing this Invitation to Comment