BC78 Both boards also concluded that business combinations achieved by contract alone should be included in the scope of the revised standards. Those combinations were not included in the scope of either IFRS 3 or SFAS 141, although the boards understand that practice in the United States generally was to account for them in accordance with SFAS 141. For example, in EITF Issue No. 97‑2 Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management Entities and Certain Other Entities with Contractual Management Arrangements, the Task Force reached a consensus that a transaction in which a physician practice management entity executes a management agreement with the physician practice should be accounted for as a business combination. Technically, that transaction would not meet the definition of a business combination in APB Opinion 16 or SFAS 141 because the physician practice management entity does not acquire either equity interests in, or the net assets of, the physician practice.

BC79 The boards understand that difficulties may arise in applying the acquisition method to combinations achieved by contract alone. In particular, such business combinations normally do not involve the payment of readily measurable consideration and in rare circumstances it might be difficult to identify the acquirer. However, as for combinations of mutual entities and for the reasons discussed above, the boards concluded that the acquisition method can and should be applied in accounting for such business combinations. In reaching that conclusion, the boards also concluded that in a business combination achieved by contract alone: