Draft narrow-scope amendments to IFRS 3

On 30 May, the IASB published an ED proposing limited amendments to IFRS 3 – Business combinations. The main aim of these amendments is to update the reference to the Conceptual Framework, referring to the 2018 text rather than the earlier 1989 version.

Keywords: Mazars, Thailand, IFRS, IFRS 3, Business Combinations, IASB

24 July 2019

Since updating this reference could entail consequences (as the definition of assets and liabilities in the 2018 Conceptual Framework differs from that in the previous version) that are likely to generate gains or losses after accounting for the business combination (i.e., some assets and liabilities recognised as part of the business combination might not meet the definitions of other IFRSs and could therefore require immediate derecognition), the IASB proposes to amend IFRS 3 to clarify that, for transactions and other events within the scope of IAS 37 – Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 – Levies, an acquirer must apply these standards to identify the liabilities assumed in a business combination.

Finally, the IASB proposes to add an explicit statement to the effect that an acquirer should not recognise any assets acquired in the course of a business combination. At present this statement appears in the Bases for Conclusions which accompany the standard, but is not an integral part of it.

The application date of these amendments will be announced by the IASB after the comments period, which ends on 27 September 2019. The exposure draft can be consulted at the IFRS website