Deloitte 164-page guide dealing mainly with accounting for business combinations under IFRS 3, published July 2008. Another area of change is contingent consideration, which will be measured at fair value at the acquisition date; generally subsequent changes will be recognised in proit or loss if the contingent consideration is classiied as a liability. However, one Committee member expressed concern with issuing a rejection notice given that at least some diversity exists in practice (citing an unsolicited comment letter which has been received by the Committee in advance of this discussion). IFRS 3.IE1-IE15: Reverse Acquisitions - Acquirer in a reverse acquisition 17 2.2. Sometimes a parent can acquire an entity in stages, which we call a step acquisition. IFRS 3 also expands the disclosure requirements previously included in IAS 22. IFRS 3 Business Combinations outlines the accounting when an acquirer obtains control of a business (e.g. These examples are based on illustrative examples from the IFRS for SMEs. IFRS 9 Financial Instruments (2014) 159 ... Acquisition of subsidiary 112 34. Overview. In addition, IFRS and its interpretation change … . The following markings in the left ‑hand margins indicate the following. HKFRS 3 is to maintain international convergence arising from the revision of IFRS 3 Business Combinations (IFRS 3) by the International Accounting Standards Board (IASB). Example A—acquisition of real estate Entity A has three CGUs: X, Y and Z. Additionally, there is $10m of goodwill allocated to this group of CG… When the listed company is the accounting acquiree and is also a business for IFRS 3 purposes, IFRS 3's reverse acquisition approach applies in full. They clarify the definition of a business, with the aim of helping entities to determine whether a transaction should be accounted for as an asset acquisition or a business combination. IR�l�����n��9�B��1�Hv+����kp����2�f9B��{�_�̴�R�����. IFRS Taxonomy 2019 – Illustrative examples Business Combinations. IFRS 3 Business combinations prescribes accounting and disclosure requirements for the acquiring entity in a business combination scenario. However both approaches resulted in consistent conclusions. Table 3: Non-controlling interest measured at its share of the acquisition date value of the net assets of the acquiree Net asset value of S Limited as at 31 December 2010(R295 000 at acquisition + R100 000 post-acquisition profits) It is suggested that the two primary factors that may lead to the conclusion that the transaction involves a reverse … In reaching the above recommendation, which was developed considering the specific fact patterns received by the Committee, the staff noted that general guidelines could be developed to state how the existing requirements on business combinations in IFRS 3 and on share-based payments in IFRS 2 would be applied in circumstances in which the accounting acquiree does not meet the definition of a business. IFRS 3®, Business Combinations was issued in January 2008 as the second phase of a joint project with the Financial Accounting Standards Board (FASB), the US standards setter, and is designed to improve financial reporting and international convergence in this area. IFRS 2 Share based payment, is applied to a reverse acquisition when the accounting acquiree does not constitute a business as defined under IFRS 3. IFRS 3 illustrates the calculation of consolidated goodwill at the date of acquisition as: Consideration paid by parent + non-controlling interest - fair value of the subsidiary’s net identifiable assets = consolidated goodwill. IFRS 3 provides guidance on accounting for reverse acquisitions (IFRS 3.B19-B27). The IASB’s Illustrative Examples on implementing IAS 38 are reproduced below for reference. Illustrative examples In addition to the amendments described above, the Board provided a series of illustrative examples to help constituents to apply assess and compare the performance of the guidance in IFRS 3 on the definition of a business. Reverse acquisitions Illustrating the consequences of recognising a reverse acquisition by applying paragraphs B19–B27 of IFRS 3. The legal acquirer has a July 31 year-end and the accounting acquirer has a December 31 year-end. IFRS 2 Share based payment, is applied to a reverse acquisition when the accounting acquiree does not constitute a business as defined under IFRS 3. Guidance on reverse acquisition accounting is provided in It prescribes the rules for subsequent measurement and accounting and defines all the necessary disclosures . Specifically, the Committee member noted that US GAAP would generally capitalise the listing costs outlined in the submissions rather than expensing as proposed under the staff analysis. These words serve as exceptions. 8 IFRS 3 (Revised): Impact on earnings –the crucial Q&Afor decision-makers Questions and answers Scope and applicability The business combinations standard represents some significant changes for IFRS but is less of a radical change than the comparable standard in US GAAP. the amount of any non-controlling interest in the acquiree measured in accordance with IFRS 3 and iii. IFRS 3 does not apply to: • the accounting for the formation of a joint arrangement in the financial statements of the joint arrangement itself • the acquisition of an asset or … 1 0 obj<> endobj 2 0 obj<>/Font<>/ProcSet[/PDF/Text]/ExtGState<>>> endobj 3 0 obj<>stream Such business combinations are accounted for using the 'acquisition method', which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date. 12240.3 For example, assume a reverse acquisition between 2 public reporting companies occurs on July 15. The legal acquirer changed its year end to December 31 in conjunction with a reverse acquisition. 01 Dec 2020  -  At the acquisition date, the acquirer should classify or designate acquired assets and assumed liabilities a… Practical guide to Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 for interest rate benchmark (IBOR) reform The IASB has issued amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 that address issues arising during the reform of benchmark interest rates including the replacement of one benchmark rate with an alternative one. 9D�E�no>͕�3��7^@`��-�%Dl�\�py׻nMF�2Y�1���a�k)�����N$���fV�u5�w'�M%����uj��-��QZ� �c��Sj�����t�9"��ݒ�d��(l�(��H&�h�h�x��d5C����d�V��Æ���D~ә:c�R=� Oq#;&�9@�"�$Eh�p�:�͊�$���� Insights 2.3.60.10 Paragraph 2.3.60.10 of the 12 th edition 2015/16 of our publication Insights into IFRS . Goodwill is then recognised to the extent the deemed acquisition cost exceeds the fair value of the listed company's identifiable assets and liabilities. This updated handbook aims to help you apply IFRS 2 in practice and explains .  -  whether a direct acquisition or a reverse acquisition is expected to be accounted for using the guidelines provided by IFRS 3. Following the debate, Committee members generally agreed that in the case of a reverse acquisition transaction where one of the parties is not a business, and therefore, the premium can only be attributed to acquiring access to the listing status, these costs should be expensed. IFRS 3 … IFRS 3 Business Combinations Illustrative examples These examples accompany, but are not part of, IFRS 3. Amendments to the Illustrative Examples accompanying IFRS 3 Business Combinations Paragraphs IE73–IE123 and their related headings are added. The amended standard and new standard are effective for periods beginning on or after 1 January 2017 and 1 January 2018, respectively. These examples represent how some of the disclosures required by IFRS 3 (in IE72) for acquisition of a company might be tagged using both block tagging and detailed tagging. MFRS 138 IE i Illustrative Examples on MFRS 138 Intangible Assets These Illustrative Examples accompany, but are not part of, MFRS 138. IFRS 3 (Revised) further develops the acquisition model and applies to more transactions, as combinations by in a business combination achieved in stages, The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. 14 1.3.1 Scope of IFRS 3 14 1.3.2 Accounting for common control business combinations outside the scope of IFRS 3 17 2 Identify the acquirer 18 2.1 Reverse acquisitions 20 3 When is the acquisition date? 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