IFRS 3 A breif overview

A business combination is bringing toghether of seperate entities into one reporting entity
scope of IFRS 3 does not cover the following

• Combination in which seperate entities are brought together to form a joint venture
• Combination involving entities under common control
• Combination involving two or more mutual entities
• Combinations in which entities are brought toghether by a contract without any ownership intrest

As in our AS-14 there are two methods of accounting i.e. purchase method , pooling of intrest method but IFRS 3 recognises only one method that is purchase method if we compare both of them the basic diffrences are

1. Method of accounting

IFRS 3-: In this purchase method is used for accounting of all business combinations ,Acquirer is identified for all business combinations and cost of business combination is measured

AS-14-: two methods are prescribed by the standard i.e. pooling of intrest method and purchase method.In purchase method all the identifible assets and liabilities of the acquiree are accounted for at there book value or fair market value

As per IFRS the cost of business combination will be the

• Fair value at the date of exchange of assets given
• F.V. of liabilities incurred
• F.V. of equity instruments issued by the acquirer
• Cost directly attributable to business combination

the standard describes detailed information about the costs which will be included and costs which are not to be considered however no such guidence is available in AS-14