Business Combinations under common control (BCUCC) transactions are frequently undertaken for a variety of reasons. For example, they take place as part of a reorganization to achieve synergies or in preparation for the sale of part of the group. BCUCC transactions can have different impacts on financial statements depending upon how they are accounted for.

Although BCUCC transactions are frequently carried out in practice and have significant effects on financial statements, IFRS has not yet provided an organized and consistent accounting standard for BCUCC transactions. Such lack of standard causes diversity in practice which in turn results in deteriorated comparability of accounting information between companies.

In this research report, related accounting standards for BCUCC are reviewed, the KASB’s surveys are summarized, and accounting policies for BCUCC in practice across jurisdictions are documented. In addition, value relevance of fair value information in BCUCC transactions is empirically tested and no incremental value relevance is found, suggesting either no clear information value on average or poor measurement and/or disclosure. Discriminating factors in implementing that guidance by evaluating the economic substance of the underlying transaction which would have influenced the corresponding accounting treatment to adopt are also discussed.

Thus, it is hoped that this report contributes to the future BCUCC research project of the IASB and eventually helps IASB develop or establish the accounting standards on BCUCC.