ASB Update Janu 4 Business Combinations under Common Control (Agenda Papers 23A and 23B) ‘The Board met on 29 January 2020 to discuss its research project on Business Combinations under Common Control. Update on when each measurement approach would apply (Agenda Paper 23A) ‘The Board discussed feedback on its tentative decision on when each Measurement approach would apply to transactions within the scope of the project. ‘The Board had previously tentatively decided that a privately held receiving entity would be: a. permitted to apply a predecessor approach if all of its non-controliing shareholders have been informed about, and not objected to, the receiving entity applying that approach (an exemption); and b. required to apply a predecessor approach if all of its non-controlling shareholders are the receiving entity's related parties (an exception). At this meeting, the Board explored whether and, if so, how the exemption and the exception could be extended to entities whose equity instruments are traded in a public market. ‘The: Board was not asked to make any decisions. Predecessor approach—consideration and presentation in equity (Agenda Paper 238) ‘The Board tentatively decided that when a receiving entity in a business combination under common control reports on that combination by applying a predecessor approach it would be required: a. to measure consideration paid in assets at the carying amounts of those assets at the date of the combination. Ten of 14 Board members agreed and three disagreed with this decision. One Board member was absent. b. to measure consideration in the form of incurred liabilities towards the transferor— or liabilities assumed from the transferor—at the carrying amounts of those liabilities, as determined in accordance with applicable IFRS Standards, on the initial recognition of those liabilities at the date of combination. Thirteen of 14 Board members agreed. One Board member was absent.‘c. to recognise transaction costs as an expense in the statement of profit or loss in the period in which they are incurred. Thirteen of 14 Board members agreed. One Board member was absent. d. to recognise costs related to the issue of debt or equity instruments in accordance with IAS 32 Financial Instruments: Presentation and IFRS 9 Financial Instruments. Thirteen of 14 Board members agreed. One Board member was absent. . to recognise as a change in equity any difference between the consideration paid and the carrying amounts of assets and liabilities received. Twelve of 14 Board members agreed and one disagreed with this decision. One Board member was absent. ‘The Board tentatively decided not to prescribe: a. howa receiving entity would measure consideration paid in its own shares; and b. in which component or components of ts equity a receiving entity would present any difference between the consideration paid and the carrying amounts of assets, and liabilities received. ‘Twelve of 14 Board members agreed and one disagreed with these decisions. One Board member was absent. ‘These tentative decisions complete the Board's discussions about how a predecessor approach would be applied by a receiving entity. Next steps Ata future meeting, the Board will discuss what information an entity should disclose about its transactions within the scope of the project. The Board will also decide what type of consultation document to publish for this project and whether to begin the balloting process for that document.