Insights into IFRS 3 - The acquisition method at a glance

Mergers and acquisitions (business combinations) can have a fundamental impact on the acquirer’s operations, resources and strategies. For most entities such transactions are infrequent, and each is unique.

IFRS 3 ‘Business Combinations’ contains the requirements for these transactions, which are challenging in practice. The Standard itself has been in place for more than ten years now and has undergone a post implementation review by the IASB. It is one of the most referred to Standards currently issued. 

Our ‘Insights into IFRS 3’ series summarises the key areas of the Standard, highlighting aspects that are more difficult to interpret and revisiting the most relevant features that could impact your business.

This article provides a high-level overview of IFRS 3 and explains the key steps in accounting for business combinations in accordance with this Standard. It also highlights some practical application issues dealing with:

  • deal terms and what effect they can have on accounting for business combinations and
  • how to avoid unintended accounting consequences when bringing two businesses together.


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