Business Combinations Flashcards
What is the accounting standard for business combinations?
IFRS 3
What three things are required for there to be an acquisition of a business rather than of an asset?
Inputs
Processes
Outputs
How will this change with under ED 2016/1?
Stage 1 - What has been purchased? if a single group of assets, no business
Stage 2 - IPO
Are acquisition costs expensed or included in the goodwill calculation?
Expensed
What do you do with a bargain purchase?
Reassess and take to P/L as a credit if reasonable
How long do you have to confirm the FV of Assets at acquisition?
12 months from date of acquisition NOT end of accounting period. You can change the goodwill unless it is a subsequent change.
What so the definition of a business under IFRS 3?
Integrated set of activities and assets which are ca-able of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members or participants.
What will a business typically have?
Inputs and processes applied to the ability to create outputs.
What are outputs?
Results of inputs and processes and are usually present within a business but are not a necessary requirement for a set of integrated activities and assets to be defined as a business at acquisition
What does the exposure draft say?
No business acquisition occurs where substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets - screening test
When should something be treated as an asset acquisition instead of a business combination?
Where the acquisition fails the definition of a business combination
