Sunday 31 August 2014
The objective of this amendment is to clarify certain aspects of accounting for contingent consideration in a business combination.
The IASB noted that the classification requirements for contingent consideration were unclear as to when 'other applicable IFRSs' would need to be used to determine the classification of contingent consideration as either a financial liability or an equity instrument.
The IASB also noted that IFRS 3 Business Combinations requires the subsequent measurement of contingent consideration to be at fair value; however IFRS 3 also refers to IFRS 9 Financial Instruments and "IAS 37 or other IFRSs as appropriate" in the subsequent measurement requirements for contingent consideration. IFRS 9 and "IAS 37 or other IFRSs as appropriate" potentially have different measurement bases that are not fair value.
The IASB therefore proposed to clarify this by:
IASB concludes 2010–2012 & 2011–2013 Annual Improvements Cycles
The IASB tentatively decided to approve the revised, proposed amendments to IFRS3 and consequential amendments to IFRS 9 and IAS 39, subject to review of the drafting
The Interpretations Committee discussed subsequent measurement of liability contingent consideration at this meeting
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