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Business Combination

IFRS 3 defines a business combination as when an acquirer obtains control over another business, known as the acquiree. The acquisition method must be used to account for the business combination. This method involves 5 steps: 1) Identifying the acquirer, 2) Determining the acquisition date, 3) Determining the consideration transferred, 4) Recognizing and measuring the acquiree's assets, liabilities, and non-controlling interest, and 5) Recognizing and measuring any resulting goodwill or gain on bargain purchase. Fair values are measured as of the acquisition date and may be adjusted within one year of that date if values change.

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54 views1 page

Business Combination

IFRS 3 defines a business combination as when an acquirer obtains control over another business, known as the acquiree. The acquisition method must be used to account for the business combination. This method involves 5 steps: 1) Identifying the acquirer, 2) Determining the acquisition date, 3) Determining the consideration transferred, 4) Recognizing and measuring the acquiree's assets, liabilities, and non-controlling interest, and 5) Recognizing and measuring any resulting goodwill or gain on bargain purchase. Fair values are measured as of the acquisition date and may be adjusted within one year of that date if values change.

Uploaded by

Karlayaan
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BUSINESS COMBINATION

 IFRS 3 DEFINES BUSINESS COMBINATION AS ACQUIRER (PARENT) OBTAINS CONTROL


OVER THE ACQUIREE (SUBSIDIARY)
 USE ACQUISITION METHOD ONLY
 STEPS TO CONSIDER UNDER ACQUISITION METHOD:
 1.IDENTIFY THE ACQUIRER (SYEMPRE ALAMIN MO MUNA KUNG SINO YUNG
PARENT)
 2.DETERMINE THE ACQUISITION DATE (TAPOS SUNOD MONG ALAMIN KUNG
KELAN BA NAGKARON NG ACQUISITION)
 3.DETERMINE THE CONSIDERATION (TIGNAN MO NA REN KUNG ANO YUNG
IBABAYAD NIYA DON SA INACQUIRE NIYANG BUSINESS MO)
 4.RECOGNIZE & MEASURE THE IDENTIFIABLE ASSETS ACQUIRED, LIABILITIES
ASSUMED, ANY NCI IIN THE ACQUIREE. (AFTER MALAMAN KUNG SINO ANG
PARENT ANT KUNG KELAN BINILI YUNG BUSINESS PATI KUNG ANO YUNG
MGA IBABAYAD SAYO, SYEMPRE AALAMIN MO NA NGAYON YUNG FAIR
VALUE NUNG BIBILHIN NIYA SAYO)
 5.RECOGNIZE & MEASURE ANY RESULTING GOODWILL OR GAIN ON BARGAIN
PURCHASE ON BUSINESS COMBINATION. (KAPAG NALAMAN NA KUNG ANO
YUNG IBINAYAD AT FV NUNG BINILI, EDI TIGNAN MO KUNG ANG RESULT
BA IS GOODWILL NA PASOK SA ASSET O BPG NA PASOK SA EQUITY)
o CONSIDERATION < FVNA = GOODWILL
o CONSIDERATION > FVNA = BPG

 FV OF CONSIDERATION & NET ASSETS ACQUIRED SHALL BE MEASURED @ THEIR


ACQUISITION DATE FAIR VALUES. (KAYA IMPORTANTENG INAALAM KUNG KELAN
YUNG ACQUISITION DATE EH KASE TINITIGNAN KUNG MAGKANO NABA YUNG
FV NUNG CONSIDERATION AT NET ASSETS NUNG TIME NA INACQUIRE YUNG
BUSINESS)
 SUCH FAIR VALUES ARE SUBJECT TO ONE (1)- YR MEASUREMENT PERIOD FROM
ACQUISITION DATE. CHANGES IN VALUES WITHIN THAT PERIOD ARE CALLED
MEASUREMENT PERIOD ADJUSTEMENTS AFFECTING GW (BPG). THUS, GENERALLY SHALL
BE ACCOUNTED FOR RETROSPECTIVELY.

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