Deloitte comment letter on IFRIC tentative agenda decision 'IFRS 3 — Business combinations involving newly formed entities: factors affecting identification of the acquirer'
We do not agree with the Committee’s decision to deal with this issue, which is widespread in certain jurisdictions (albeit not, as noted in the tentative agenda decision, in many others) and for which we have seen real diversity in practice, through a rejection notice.
Whilst we agree that a reasonable analysis of the requirements of IFRS 3 is presented in the tentative agenda decision, there would be significant transitional issues for entities that have previously applied a different treatment. Accordingly, any clarification of the treatment of transactions such as those described in the tentative agenda decision should be carefully considered, including consideration of potential changes in practice that may result and the need for transitional provisions. We believe that a full interpretation or an amendment to IFRS 3 via the Annual Improvements Project would be more suitable for these purposes than an IFRIC rejection notice.