IMA FRC comment letter response to proposed ASU on business combinations and consolidation

December 16, 2024

IMA’s Financial Reporting Committee (FRC or Committee) issued a comment letter to share its views on the Financial Accounting Standards Board’s (FASB or Board) Proposed Accounting Standards Update, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (Proposed Update).

The Committee expressed its support for the Board’s efforts to reduce inconsistent outcomes in accounting for business combinations where the identity of the accounting acquirer is not clear. The Committee believes the Proposed Update will produce more decision-useful information and reduce complexity in financial reporting. However, the Committee also believes the Proposed Update would be clearer and easier to apply if the Board simply required all acquisitions of a business where the accounting acquirer is not clear to apply the guidance in ASC 805-10-55-10 through 55-15.