This free, guided checker walks your finance team through the key decision points for IFRS 3 Common Control Business Combinations. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Common control exists when the same party or group controls both entities immediately before and after the combination, typically through majority voting interest or dominant influence.
The IFRS 3.2(c) common control exclusion does not apply; account for the combination using the acquisition method (IFRS 3.4).
Official guidance: IFRS issued standards
Transitory control arrangements created solely to achieve a particular accounting outcome may not qualify; assess whether the same ultimate controlling party existed throughout the relevant period.
Control that is transitory fails the IFRS 3.B1 condition, so the combination may fall back into IFRS 3 scope and require acquisition accounting (IFRS 3.4).
Official guidance: IFRS issued standards
IFRS 3.2 excludes common control combinations from its scope; the entity applies an accounting policy choice permitted by IAS 8 in the absence of specific IFRS guidance.
If the IFRS 3.2(c) exclusion is not met, the combination is within IFRS 3 scope and the acquisition method in IFRS 3.4 applies.
Official guidance: IFRS issued standards
IFRS practice commonly applies either pooling-of-interests at predecessor carrying amounts or acquisition accounting at fair value; the policy must be applied consistently and disclosed under IAS 8.
Use the interactive tool above to see how this applies to your situation.
Official guidance: IFRS issued standards
Pooling typically records net assets at historical book values, does not remeasure to fair value, and does not recognize goodwill or bargain purchase gains from the common control transfer.
Under a pooling policy, adjust recognition to predecessor carrying amounts and reverse any fair value uplift or goodwill recognized on the transfer (IAS 8.10-12; IAS 8.13).
Official guidance: IFRS issued standards
Some entities elect to apply IFRS 3 acquisition method for common control transactions despite scope exclusion; this creates goodwill and fair value adjustments unlike pooling.
An elected acquisition policy must be applied in full; complete the fair value purchase price allocation and goodwill measurement by analogy to IFRS 3.18 and IFRS 3.32.
Official guidance: IFRS issued standards
Pooling-of-interests presentation typically requires comparative restatement as if the combination occurred at the beginning of the earliest period presented when entities were under common control.
If the elected pooling convention restates, present comparatives as though the entities were combined from the date common control began and disclose that basis (IAS 1.38; IAS 8.10-12).
Official guidance: IFRS issued standards
Even under common control, assess whether an integrated set of activities and assets constitutes a business versus an asset drop-down affecting presentation and policy application.
Account for the transfer as an asset acquisition - allocate the amount paid to the individual assets and liabilities - with any off-market element recognized in equity (IFRS 3.2(b)).
Official guidance: IFRS issued standards
Transfers within a group may be accounted for as equity movements in the ultimate parent's consolidated financial statements with no gain or loss when pooling is applied.
Assess whether off-market terms embed a capital contribution or distribution recognized directly in equity as a transaction with owners (IAS 1.106(d)(iii)); IFRIC 17.5 scopes common control distributions out of IFRIC 17.
Official guidance: IFRS issued standards
Disclose the selected method, reasons it provides reliable and more relevant information, and that IFRS 3 does not apply to the transaction.
Add material accounting policy information describing the elected common control method and the IFRS 3.2(c) scope exclusion before the financial statements are authorized (IAS 1.117).
Official guidance: IFRS issued standards
In the ultimate parent's consolidated financial statements, the transfer may be eliminated in full with no gain or loss when the policy treats the transaction as an internal reorganization.
Common control combination accounting appears complete: the elected policy is applied consistently, comparatives follow the disclosed convention, and intragroup effects eliminate in consolidation (IFRS 10.B86(c)). Eliminate intragroup assets, liabilities, equity, income, expenses, and cash flows in full before issuing the consolidated financial statements (IFRS 10.B86(c)).
Official guidance: IFRS issued standards
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