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IFRS 3 Business Combinations

International Financial Reporting Standard 3

Overview of IFRS 3

  • Issued: in 2004; re-issued in 2008, followed by amendments
  • Effective date: 1 July 2009
  • What it does:
    • IFRS 3 clarifies how to identify business combination.
    • It prescribes the acquisition method in accounting for business combination.
    • Applying the acquisition method comprises 4 steps:
      1. Identifying the acquirer.
      2. Determining the acquisition date.
      3. Recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree.
      4. Recognizing and measuring goodwill or a gain from a bargain purchase.
    • IFRS 3 sets out the details for all of these steps.
    • IFRS 3 gives also additional guidance for applying the acquisition method to particular types of business combinations, such as achieved in stages or achieved without the transfer of consideration.
    • It prescribes the rules for subsequent measurement and accounting and defines all the necessary disclosures.

Articles about IFRS 3

Questions and Answers

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