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:
- Identifying the acquirer.
- Determining the acquisition date.
- Recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree.
- 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
- Summary of IFRS 3 Business Combinations
- Intro to consolidation and group accounts – which method for your investment?
- Example: How to consolidate
- Example: Consolidation with foreign currencies
- How to make consolidated statement of cash flows with foreign currencies
- How to test goodwill for impairment
- How the groups change
- How to consolidate special purpose entity
- How to account for the disposal of subsidiary
- How to account for intercompany loans under IFRS
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