IASB proposes to update references to the Conceptual Framework in IFRS 3

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IASB proposes to update references to the Conceptual Framework in IFRS 3

This edition addresses the proposed amendments to IFRS 3 Business Combinations set out in Exposure Draft ED/2019/3 Reference to the Conceptual Framework (Proposed amendments to IFRS 3) (the ‘ED’) that has been published by the International Accounting Standards Board (IASB) in May 2019.

The proposed amendments, if finalised, would replace the reference in IFRS 3 to the 1989 Framework with a reference to the 2018 Conceptual Framework.

An exception is proposed for liabilities and contingent liabilities that would be in the scope of IAS 37 or IFRIC 21 if acquired separately. For these, the acquirer would apply IAS 37 or IFRIC 21 (instead of the 2018 Conceptual Framework) to identify the obligations assumed in a business combination.

The proposed amendments would clarify that contingent assets should not be recognised when acquired in a business combination.

It is proposed that an entity applies the amendments to business combinations for which the acquisition date is on or after the beginning of the annual period in which the entity first applies the amendments.

The effective date for the amendment will be set after the comment period ends.

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