Business Combinations (IFRS 3)

This chapter examines business combination (IFRS 3) standard that applies to transactions or other events that meet the definition of the term “business combination.” Identifying an acquirer is a key requirement of the Standard, and one of the combining entities needs to be identified as the acquirer. Usually the combining entity whose relative size is significantly greater than that of the other combining entity (or entities) is the acquirer. At the acquisition date, an acquirer shall measure identifiable assets acquired and liabilities assumed in a business combination at their fair values. Furthermore, at the acquisition date, an acquirer may elect to measure components of non‐controlling interests in the acquiree at either fair value or the proportionate share of the present ownership instruments in the recognized amounts of the acquiree's identifiable assets. Consideration transferred in a business combination, including a contingent consideration arrangement, shall be recognized at acquisition‐date fair values. If changes in fair value of the contingent consideration result after the acquisition date due to additional information that the acquirer obtained after that date about facts and circumstances that existed at the acquisition date, such changes are to be treated as measurement‐period adjustments.