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IFRS 3 summary and timeline

A summary of IFRS 3 Business Combinations, including information on current proposals and a timeline of past amendments, announcements, exposure drafts and consultations.

Summary

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  • Business combinations are accounted for using the acquisition method
  • Goodwill is measured as the excess of the aggregate of:
    • consideration transferred,
    • the non-controlling (minority) interest, and
    • fair value of any previously held equity interest in acquiree,

over the identifiable net assets of the acquiree.

The non-controlling (minority) interest is measured at acquisition either at fair value or as a proportion of the fair value of the net assets of the acquiree.

Current proposals

  1. As a result of the post-implementation review of IFRS 3 the IASB has initiated a project to consider whether amendments should be made to IFRS 3 and IAS 36 to:
    • improve disclosures about acquired businesses, and
    • simplify accounting for goodwill
    • improve aspects of the impairment test for goodwill.
    A discussion paper was published in March 2020.

    An Exposure Draft IASB/ED/2024/1 Business Combinations – Disclosures, Goodwill and Impairment was published in March 2024.

  2. IFRS 3 does not provide guidance on the applicable accounting treatment where entities in a business combination are controlled by the same party. A project is underway to explore how companies should account for such transactions.

    A discussion paper was issued in November 2020.

Timeline

 
Date Update
19 May 2020 IASB issues Reference to the Conceptual Framework - amendments to IFRS 3
Effective for annual periods beginning on or after 1 January 2022.
19 March 2020 IASB issues discussion paper on Business Combinations – Disclosures, Goodwill and Impairment
30 May 2019
 IASB proposes amendments to IFRS 3 in ED/2019/3 Reference to the Conceptual Framework – proposed amendments to IFRS 3
22 October 2018 IASB issues Definition of Business amendments to IFRS 3
Effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning on or after 1 January 2020 and to asset acquisitions that begin on or after the beginning of that period. Narrow scope amendments help companies determine whether an acquisition made is of a business or a group of assets.
12 December 2017 IASB issues Annual Improvements to IFRS Standards 2015 – 2017
Effective for annual periods beginning on or after 1 January 2019.
12 December 2013 IASB issues Annual Improvements to IFRSs 2010–2012 and 2011–2013 Cycles, both of which amend IFRS 3
Annual Improvements to IFRSs 2010-2012 amendment effective for business combinations on or after 1 July 2014; Annual Improvements to IFRSs 2011-2013 amendment effective for annual periods beginning on or after 1 July 2014.
6 May 2010 IASB issues Annual Improvements to IFRSs 2010 (Amendments to IFRS 3)
Effective for annual periods beginning on or after 1 July 2010.
10 January 2008 IASB issues IFRS 3 (2008), a revised version of the standard
Effective for business combinations on or after the beginning of the first annual period beginning on or after 1 July 2009.
31 March 2004 IASB issues IFRS 3
Effective for business combinations on or after 31 March 2004.