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The objective of the proposals in the ED is to improve the information companies provide to investors, at a reasonable cost, about the acquisitions those companies make. This information is intended to help investors better assess management’s decision to make an acquisition and the performance of that acquisition.
We support IASB’s efforts to improve the information companies disclose about acquisitions to meet investors’ needs and reduce the complexity of the impairment test. However, we have received feedback on challenges faced in the practical application of the proposed disclosures for acquisitions. Hence, we propose IASB to provide further clarifications or guidance to ensure consistency in practice.
Other comments are as follows:
- In Singapore, many of the small and medium enterprises adopt the local equivalent of IFRSs and may not have evaluated their acquisitions, to the extent required for the proposed disclosure of quantification of expected synergies. Therefore, we expect that the costs might likely outweigh the benefits in having these disclosures, especially when these entities are wholly owned.
- There should be a consistent basis on how expected synergies should be derived to ensure comparability in practice.
- The proposed quantitative threshold of 10% (revenue, operating profit and assets) for identifying strategic business combinations is too low. Hence, we suggest IASB to increase the threshold to 20% and consider adopting a combination of other metrics.
Read more in our comment letter.