The International Accounting Standards Board (the Board) today published for public consultation proposed amendments to IFRS 3 Business Combinations and IFRS 11 Joint Arrangements. It clarifies both the definition of a business and how to account for previously held interests.
The proposed amendments provide:
- clearer application guidance to help distinguish between a business and a group of assets when applying IFRS 3; and
- clarification on how a company should account for previously held interest in a business, if acquiring control, or joint control, of that business.
The proposed amended application guidance on the definition of a business in IFRS 3 arises from the Board’s Post-implementation Review (PiR) process, which is conducted on each Standard and major amendment approximately two years after their effective dates. The IFRS 3 PIR shows general support for the accounting requirements in the Standard but identifies some areas where further research will be undertaken. The full PIR of IFRS 3 is available here.
The proposed amendment to accounting for previously held interests was developed through the IFRS Interpretations Committee.
The Exposure Draft—Definition of a Business and Accounting for Previously Held Interests (Amendments to IFRS 3 and IFRS 11)—can be accessed here.