IFRS 3-Business Combinations

Summary of IFRS 3-Business Combinations

IFRS 3 establishes principles and requirements for how an acquirer in a business combination:

• recognises and measures in its financial statements the assets and liabilities acquired, and any interest in the acquiree held by other parties;
• recognises and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and
• determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

The core principles in IFRS 3 are that an acquirer measures the cost of the acquisition at the fair value of the consideration paid; allocates that cost to the acquired identifiable assets and liabilities on the basis of their fair values; allocates the rest of the cost to goodwill; and recognises any excess of acquired assets and liabilities over the consideration paid (a ‘bargain purchase’) in profit or loss immediately. The acquirer discloses information that enables users to evaluate the nature and financial effects of the acquisition.

Source:

1. Phnom Penh HR
2. ifrs . org/issued-standards/list-of-standards/ifrs-3-business-combinations/