IFRS 3 Business Combinations

A business combination is: Transaction or event in which acquirer obtains control over a business (e.g. acquisition of shares or net assets, legal mergers, reverse acquisitions)

The purchase consideration includes the fair value of all interests that the acquirer may have held previously in the acquired business. This includes any interest in an associate or joint venture, or other equity interests of the acquired business. Any previous stake is seen as being ‘given up’ to acquire the entity, and a gain or loss is recorded on its disposal.

Goodwill is recognised as the excess between: - The aggregate of the consideration transferred, any noncontrolling interest in the acquiree and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree - The identifiable net assets acquired (including any deferred tax balances)

At Nisus Accountants, we provide accounting information. We have IFRS and US GAAP experience.

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