UNIFORMITY IN FINANCIAL REPORTING: THE KGK PUBLISHED A NEW PRINCIPLE DECISION REGARDING BUSINESS COMBINATIONS SUBJECT TO JOINT CONTROL.

In order to ensure uniformity in the application of financial reporting processes and to clarify the areas exempted under IFRS 3, the "Principle Decision on the Accounting Treatment of Business Combinations Under Common Control," prepared by the Public Oversight, Accounting and Auditing Standards Authority (KGK), was published in the Official Gazette on January 15, 2026, and entered into force.

This Decision establishes a technical framework for accounting policies, which are of critical importance, particularly in holding company structures and intra-group restructuring processes.

IMPORTANT TECHNICAL REGULATIONS AND ACCOUNTING PRINCIPLES

Accounting Method:

In business combinations under common control, the "pooling of interests" method must be applied in accordance with the relevant accounting standards. In this method, the merger is not treated as an acquisition, but rather as a merging of the financial statements of businesses under common control, as it does not create a new control relationship from an economic perspective. Therefore, the valuation and measurement principles specific to acquisition accounting do not apply to such mergers.

Valuation Criteria:

All assets and liabilities of the entity acquired under the merger will be included in the financial statements at their carrying amount for the relevant accounting period, without being remeasured at their fair value. This approach is adopted to ensure continuity of financial position before and after the merger and to reflect the fact that the merger does not inherently create an economic value transfer.

Compartive Presentation:

The financial statements will be adjusted and presented retrospectively, assuming the merger occurred at the beginning of the comparative periods. Accordingly, the income statement, cash flow statement, and statement of financial position for the comparative periods will be restated to reflect the effects of the merger. However, if the joint control relationship was established at a date later than the beginning of the comparative periods, the adjustments will be applied from the date on which that control was actually established.

Goodwill and Equity Effect:

In mergers under common control, since the merger transaction does not constitute an acquisition, goodwill does not arise in the financial statements. Differences between assets and liabilities arising from the merger will be recorded directly under equity in the "Effect of Mergers Involving Enterprises or Businesses Under Common Control" account, without being related to the income statement.