IFRS news | 3 August 2016
IASB IASB proposes amendments to clarify the Definition of a Business and the Accounting for Previously Held Interests
This edition outlines the proposed amendments to IFRS 3 Business Combinations and IFRS 11 Joint Arrangements set out in the recent Exposure Draft (ED) 2016/1 issued by the International Accounting Standards Board (IASB).
The IASB proposed amendments to IFRS 3 Business Combinations to clarify the definition of a business. The key proposed amendments are to specify that to be considered a business, an acquired set of activities and assets must:
- Not have a fair value of gross assess acquired concentrated in a single identifiable asset (or group of similar identifiable assets).
- Include an input and a substantive process that together contribute to the ability to create outputs.
The proposed amendments include illustrative examples and application guidance.
The IASB also proposes to amend IFRS 3 and IFRS 11 Joint Arrangements to clarify that upon obtaining control of a business that is a joint operation, an entity will, as for any other stepped acquisition of a business, have to remeasure any previously held interest in the joint operation. An entity that is a joint operator should not, however, remeasure any previously held interest in the joint operation when it acquires an additional share of a joint operation and either to retains or gains joint control.
Comments on the proposal are due by 31 October 2016.