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The IFRS for SMEs Accounting Standard Update is a staff summary of news, events and other information about the IFRS for SMEs® Accounting Standard (Standard) and related SME activities. The staff summary has not been reviewed by the International Accounting Standards Board (IASB).

This edition of the IFRS for SMEs Accounting Standard Update includes:

Topic of the quarter—Spotlight on Section 19 Business Combinations and Goodwill

Section 19 Business Combinations and Goodwill in the third edition of the IFRS for SMEs Accounting Standard sets out requirements for accounting for business combinations and goodwill. A business combination occurs when an acquirer obtains control of one or more businesses.

Why did the IASB revise Section 19?

In the second edition of the Standard, Section 19 was based on the 2004 version of IFRS 3 Business Combinations with simplifications for SMEs. In 2008 IFRS 3 was revised and has since been amended, including changes in response to feedback from the IASB’s post-implementation review. Aligning Section 19 with the updated IFRS 3 provides users of SMEs’ financial statements with a better understanding of the costs of a business combination.

What are the main changes to the revised Section 19?

The revised Section 19:

  • introduces the acquisition method of accounting for business combinations, replacing the purchase method (see Table 1—Overview of the acquisition method);
  • updates the definition of a business to align with the definition in IFRS 3. A business has three elements—inputs and processes capable of producing outputs. SMEs are permitted to apply an optional concentration test to help apply the definition of a business;
  • adds requirements on topics not previously included in the Standard, such as business combinations achieved in stages (step-acquisitions) and situations in which a new entity is formed to effect a business combination;
  • updates requirements for contingent consideration, which is now measured at fair value or the most likely amount if fair value cannot be determined without undue cost or effort; and
  • requires acquisition-related costs to be recognised in profit or loss, unless they are in the scope of Section 11 Financial Instruments or Section 22 Liabilities and Equity.

Table 1—Overview of the acquisition method

Step Description
Step 1 Identify the acquirer—the entity that obtains control.
Step 2 Determine the acquisition date—the date control is obtained.
Step 3
Recognise and measure identifiable assets acquired, liabilities assumed and any non-controlling interests (NCI):
  • Assets and liabilities are measured at their acquisition-date fair value, with some exceptions.
  • Intangible assets are recognised if they meet the recognition requirements in Section 18 Intangible Assets other than Goodwill and fair value can be measured reliably without undue cost or effort.
  • Contingent liabilities acquired are recognised even if an outflow is not probable.
  • NCI is measured at the proportionate share of net assets.
Step 4 Measure the consideration transferred—including contingent consideration and previously held interests.
Step 5 Recognise goodwill or a gain from a bargain purchase—calculated as the excess of consideration transferred (plus NCI and previously held interests) over the net assets acquired.

What are the transition requirements?

The transition requirements for SMEs moving from the second to the third edition of the Standard are written to ease transition. This approach means that SMEs do not restate business combinations that happened before their date of initial application of the third edition of the Standard. The only exception is for some contingent consideration for which the requirements in Section 19 have changed. In these cases, an SME would need to restate the cost of the combination and subsequent accounting for the contingent consideration.

The IASB also updated the educational module, Module 19 Business Combinations and Goodwill. The module includes explanations, examples and assessments (including case studies) supporting application of the requirements in Section 19.

Resources to support implementation of the Standard

To support implementation of the third edition of the Standard, the IASB has published these supporting materials:

  • educational webcasts—to help SMEs implement the Standard. This webcast series complements the educational modules. To date the IASB has released:
    • Webcast 1: Overview of the third edition of the IFRS for SMEs Accounting Standard;
    • Webcast 2: Overview of amendments to Section 11 Financial Instruments;
    • Webcast 3: Overview of amendments to Section 7 Statement of Cash Flows*;
    • Webcast 4: Overview of the new Section 2 Concepts and Pervasive Principles*; and
    • Webcast 5: Overview of the new Section 12 Fair Value Measurement*.
  • a podcast series—providing bite-sized insights into the third edition of the Standard. The January, March and September episodes are available.

Stakeholder engagement activities

As part of supporting the implementation of the third edition of the Standard, the IASB has engaged with stakeholders to explain the changes to the Standard and how the IASB plans to support implementation.

In the fourth quarter IASB members and staff presented at events:

  • in Kuala Lumpur, Malaysia, organised by the Malaysian Accounting Standards Board (October 2025);
  • online, organised by the Association of Chartered Certified Accountants (November 2025);
  • in Peru, organised by the Peruvian Accounting Standards Board (CNC) and GLASS (November 2025);
  • in Vienna, Austria, organised by the World Bank’s Centre for Financial Reporting Reform (December 2025);
  • online, organised by Georgia’s Service for Accounting, Reporting and Auditing Supervision (December 2025); and
  • online, organised by the Saudi Organization for Chartered and Professional Accountants (December 2025).

Licensing arrangements

Licensing IFRS Standards—Supporting global adoption

The IFRS Foundation owns the worldwide copyright to IFRS Standards in all languages. This ownership ensures the integrity and consistency of the Standards across jurisdictions. Stakeholders can use the Foundation’s content for private and professional purposes under its terms and conditions. However, any other use—whether commercial or non-commercial—requires explicit permission.

Licensing agreements protect intellectual property rights, maintain the IFRS Foundation’s brand reputation, and facilitate global recognition of IFRS Standards. These agreements also help control the quality of adoption and ensure that jurisdictions reference the Standards accurately in legislation and guidance.

Different licensing models have different contractual terms covering the permitted use of the Standards and the IFRS Foundation’s brand. Examples of uses that require the stakeholder to obtain an appropriate license include:

  • reproduction of the IFRS Standards;
  • adaptation (such as translation) of the IFRS Standards; or
  • distribution and/or dissemination of Foundation Intellectual Property.

More than one licence per jurisdiction might be necessary if more than one jurisdictional authority is using the Standards for more than one reporting framework or type of guidance.

IFRS for SMEs Accounting Standard

Adoption of the IFRS for SMEs Accounting Standard is tailored to each jurisdiction’s economic and regulatory environment. Licensing agreements enable jurisdictions:

  • to use the text of the Standard, including translations.
  • to add disclosure requirements or reduce options while maintaining compliance. However, if recognition and measurement requirements are modified or the scope is extended to publicly accountable entities, compliance with the IFRS for SMEs Accounting Standard cannot be claimed.

For more information on licensing IFRS Standards, visit the IFRS Foundation's licensing page.

Introducing ePubs—An enhanced way to access IFRS Accounting Standards

The IFRS Foundation now provides ePubs, an enhanced way to access IFRS Accounting Standards. The new ePubs are designed to deliver improved functionality and benefits, including:

  • interactive features—take notes, annotate content and highlight key sections directly within the publication;
  • enhanced accessibility—enjoy mobile-optimised viewing and offline access for reading anywhere, anytime;
  • improved navigation—benefit from advanced bookmarking and powerful search functionality;
  • cost efficiency—eliminate shipping fees and import duties with instant digital delivery; and
  • environmental benefits—reduce paper consumption and carbon emissions.

ePubs will initially replace the PDF offerings and gradually phase out most bound volumes. The third edition of the IFRS for SMEs Accounting Standard and its translation into Spanish are now available as ePubs.

*New resources published since the September 2025 IFRS for SMEs Accounting Standard Update.