IFRS 3 Business combinations

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bambulka
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Joined: 17 Mar 2021, 16:25

IFRS 3 Business combinations

Post by bambulka »

"IFRS 3 takes such limitations into account and introduces 12-month measurement period. It is a period during which the acquirer can make retrospective adjustments to acquisition accounting if it obtains new information about facts and circumstances that existed at the acquisition date. Such adjustments should be applied retrospectively together with changes in comparative data, e.g. depreciation charges (IFRS 3.45-50)."

Does this also apply when company is selling subsidiary or disposing part of its business?
JRSB
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Re: IFRS 3 Business combinations

Post by JRSB »

Do you mean that information is later discovered which would affect the accounting for the disposal? Presumably that would fall under error rules if straddling a year end.

I assume the measurement period is designed to accommodate new intangibles etc, which can reasonably take time to value etc, whereas disposals should only concern facts?
bambulka
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Joined: 17 Mar 2021, 16:25

Re: IFRS 3 Business combinations

Post by bambulka »

yes exactly. so there is no measurement period like there is at the of acquisition and you can adjust the opening balance/goodwill? For the disposal, this doesn't exist? It wouldn't be error but it would be reflected in P&L rather then adjusting balance sheet?
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Marek Muc
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Re: IFRS 3 Business combinations

Post by Marek Muc »

there's no such provision for disposals of subsidiaries/ businesses (note that IFRS 3 doesn't even cover them)

and why would you need it? you just have derecognise all assets and liabilities of the disposed subsidiary/business, there is no need to allocate the price or identify assets/liabilities that were not recognised in the accounts

I've been through a few major disposals and never felt the need for some equivalent of 'measurement period' - what's your story? ;)
bambulka
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Re: IFRS 3 Business combinations

Post by bambulka »

yes true. there shouldn't be a need to change anything. thank you
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