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IFRS 3 Business Combinations

Welcome
- Introduction
Overview
- How to use this course?
- Overview of IFRS 3
- Amendments to IFRS 3
- IFRS 3 key terms and definitions
- Method of accounting
- Introducing the companies and people
Session 1—Identifying business combinations
- Learning objectives
- Felicia’s accidental fall
- Ready to help Hilda?
- Review the learning session
- Review the scenario
Session 2—Assets, liabilities, and non-controlling interests
- Learning objectives
- A last minute scenario
- Ready to help Hilda?
- Review the learning session
- Review the scenario
Session 3—Recognizing and measuring goodwill
- Learning objectives
- Reporting date preparations
- Ready to help Felicia?
- Review the learning session
- Review the scenario
Final assessment
- Assessment instructions
- Disclaimer

IFRS 3 Business Combinations

Terms

The business or businesses that the acquirer obtains control of in a business combination

The entity that obtains control of the acquire

The date on which the acquirer obtains control of the acquiree

An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities

A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as "true mergers" or "mergers of equals" are also business combinations as that term is used in this IFRS.

Usually, an obligation of the acquirer to transfer additional assets or equity interests to the former owners of an acquiree as part of the exchange for control of the acquiree if specified future events occur or conditions are met. However, contingent consideration also may give the acquirer the right to the return of previously transferred consideration if specified conditions are met.

An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

For the purposes of this Standard, equity interests is used broadly to mean ownership interests of investor-owned entities and owner, member or participant interests of mutual entities.

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date

An asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized

An asset is identifiable if it either:

a) Is separable, i.e., capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or

b) Arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Any economic resource that creates outputs, or has the ability to contribute to the creation of outputs when one or more processes are applied to it, e.g., non-current assets (including intangible assets or rights to use non-current assets), intellectual property, the ability to obtain access to necessary materials or rights and employees

An entity, other than an investor-owned entity, that provides dividends, lower costs or other economic benefits directly to its owners, members or participants. For example, a mutual insurance company, a credit union and a co-operative entity are all mutual entities.

The equity in a subsidiary not attributable, directly or indirectly, to a parent

The result of inputs and processes applied to those inputs that provide goods or services to customers, generate investment income (such as dividends or interest) or generates other income from ordinary activities

For the purposes of this IFRS, owners is used broadly to include holders of equity interests of investor-owned entities and owners or members of, or participants in, mutual entities.

Any system, standard, protocol, convention, or rule that, when applied to an input or inputs, creates outputs or has the ability to contribute to the creation of outputs, e.g., strategic management processes, operational processes, and resource management processes

Here are some useful links and documents:

S1 Purchase agreement
S2 Pilatus statement of financial position
S2 Franz’s email re: restructuring
S2 Pre-existing agreements
S2 Net Assets Calculation
S2 Net Assets Calculation 2
S3 Felicia’s email re: measurement choice
S3 Felicia’s email re: settlement of pre-existing relationship
S3 Hilda’s email re: fair value of investment property
S3 Hilda’s email re: prospective business combination