|
|
FEE supports the approach to classifying public sector combinations. The comprehensive set of examples is useful in guiding the decision-making procedures. However, a potential issue has been identified in the wording of some examples − causing inconsistent application of the “imposition” indicator in determining whether a presumption of an acquisition should be rebutted.
FEE agrees with the ED that the modified pooling of interests method of accounting should be used in accounting for amalgamations.
However, FEE believes that the ED should include examples where the two parties involved in the amalgamation have the same accounting policies but have timing differences in respect to the revaluation of their assets as this can cause issues in practice.
FEE agrees with the proposed treatment of the recognition of the residual amount arising from an amalgamation, since the residual amount should be recognised as an ownership contribution\distribution or in net assets\equity, depending on whether they are under common control or not.
FEE also agrees with the adjustments being made through the residual amount, rather than through other components of net assets/equity.
However, FEE does not agree with requiring ‘adjustment’ or ‘derecognition’ of the existing revaluation reserves, as implied by paragraph 37 of the proposed IPSAS.
FEE disagrees with the suggestion of the IPSASB that the conceptual approach requires these balances to be disregarded.
FEE agrees that the acquisition method should be used in accounting for acquisitions, since the provisions of the ED are mostly in line with IFRS3 and the differences and exceptions generally are well-founded.