The following Questions and Answers (Q&As) are developed by staff of the Hong Kong Institute of Certified Public Accountants (HKICPA). These are informal staff views and do not represent the official views of the HKICPA Council, standard setting committees, HKICPA management or other staff members of the HKICPA. The HKICPA and its staff do not accept any responsibility or liability in respect of the views expressed and any consequences that may arise from any person acting or refraining from action as a result of any materials below. Members of the HKICPA and other users of these materials should read the original text of the Accounting Guideline 5 (Revised) Merger Accounting for Common Control Combinations in the HKICPA Members’ Handbook for further reference and seek professional advice when considering the materials below. If you could not find your question, please kindly submit your enquiry to us (see link).
Q&As on Amendments to Accounting Guideline 5 (Revised) (effective from annual reporting periods commencing on or after 1 January 2028)
In September 2026, the HKICPA issued amendments to AG 5 to address stakeholder feedback on outstanding issues identified in the 2016 post-implementation review of AG 5. The key amendments are:
Scope of AG 5 – clarifying the scope by adding references to the definitions of “business” and “business combination” in HKFRS 3 Business Combinations;
Controlling party and carrying values – clarifying that judgement is required to determine which controlling parties’ perspective should be used to recognise the net assets of the acquired business or entity, and requiring disclosure of the basis for that determination;
Shares issued as consideration – requiring disclosure of the measurement approach for shares issued as consideration, rather than prescribing a single method for all types of common control combinations; and
Restating comparatives – introducing a practical expedient that allows entities not to restate comparatives, unless such restatement is required by applicable laws or regulations.
The amendments shall be applied prospectively to common control combinations that occur on or after the beginning of the first annual reporting period beginning on or after 1 January 2028, with early adoption permitted.
