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Lecture 6 Business Combination
Lecture 6 Business Combination
Lecture 6 Business Combination
IFRS 3
BUSINESS COMBINATIONS
Conceptually, a business combination occurs when businesses
BAS 27, & BAS 28) does not differentiate: all business
combinations by corporations are accounted for as
purchases
BUSINESS COMBINATIONS
A business combination is a transaction or other event in which a
acquisitions.
parent and subsidiary. Rather than report using the cost or equity
method, the parent will prepare consolidated financial statements
and combine the accounts of the subsidiary with those of the parent in
the published financial statements.
Control is determined by the facts of the relationship, not by the
Cost
Method
0
%
~20
%
Consolidation
accounting
~50
100
Business Combination%
%
Range
DEFINITIONS
Combined Enterprise: The accounting entity that results from a
business combination.
Constituent Companies: The business enterprises that enter into
a business combination.
Combinor: A constituent company entering into a purchase-type
business combination.
B u s in e s s C o m b in a tio n s
F r ie n d ly T a k e o v e r
7
H o s tile T a k e o v e r
tactics.
combination
between
combination.
The price for a business combination consummated for
the
purchase
method,
the
acquiring
GOODWILL
IFRS 3
Goodwill (an asset) is measured initially indirectly as the difference
the
consideration
transferred,
the
acquirer
immediately
PRINCIPLE
Consolidated financial statements present the parent and all its