The absence of specific requirements has led to a perceived diversity in practice. A related topic is what is commonly referred to as ‘push down accounting’, whereby the new values of assets and liabilities in an acquired subsidiary are ‘pushed down’ to that subsidiary.
The essence of the BCUCC project is identifying whether and when an entity should continue to use the previous carrying amounts of a transferred business (carry-over accounting) and whether and when it should apply business combination accounting. The IASB will also assess whether any aspects of carry-over accounting or business combination accounting need to be modified for these combinations, because they are directed rather than externally transacted changes of control between related parties.
The IASB is aware that securities regulators are concerned about divergence in views and practice when a parent entity transfers businesses into a newly-formed entity as part of a sale by way of an initial public offering. The IASB is giving priority to assessing this type of activity to see if it is appropriate or feasible to accelerate a Standards-level project that is focused on initial public offerings.