3. OBJECTIVE
To improve :
the relevance, reliability and comparability of
the information that a reporting entity
provides in its financial statements about a
business combination.
4. OBJECTIVE
To achieve this objective :
this standard established principles and
requirements for the acquirer.
These principles and requirements are:
a) How the acquirer recognize and measures in its
financial statements the identifiable assets
acquired, the liabilities assumed and any non-
controlling interest in the acquire.
5. OBJECTIVE
To achieve this objective :
b) how the acquirer recognizes and measures the
goodwill acquired in the business combination or a
gain from a business combination.
c)What information to disclose;
6. SCOPE
• This IFRS applies to a transaction or other event
that meets the definition of a business
combination. It does not apply to:
i. Joint arrangements
ii. Acquisition of an asset or a group of assets that
does not constitute a business.
iii. Combination of entities or businesses under
common control.
iv. Acquisition by an investment entity.
7. Identification
A transaction or other event is a business
combination if:
The assets acquired and liabilities assumed
constitute a business.
If the asset acquired are not a business, it must be
accounted for as an asset acquisition.
• Paragraphs B5–B12 provide guidance on identifying
a business combination and the definition of a
business.
8. Acquisition Method
• This standard requires to use the acquisition
method to account for a business combination
transaction.
• IT involves four steps:
Step 1: Identify the acquirer
Step 2: Determine the acquisition date: date on which
the acquirer obtains control.
9. Acquisition Method
Step 3: Recognize and measure the identifiable assets
acquired, the liabilities assumed and any non
controlling interest in the acquiree;
Step 4:Recognize and measure the goodwill or a gain
from a bargain purchase.
10. Disclosures
• Adjustments recognized in the current reporting
period that relate to a business combination that
occurred in this period or in the previous period.
