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IFRS 3 Business Combinations - Definition of a business - IASB

Date recorded:

At its meeting on December 15-16, 2015, the IASB considered the IFRS Interpretations Committee's comments on the IASB's proposed amendments to IFRS 3. The IASB tentatively decided to: (i) retain the "substantially all" threshold and ask constituents whether they think that this practical approach is useful; (ii) clarify, in the illustrative examples of the proposed amendments that a building acquired and an in-place operating lease shall be considered a single asset for the evaluation of the 'substantially all' threshold; (iii) clarify, in the proposed amendments to the application guidance of IFRS 3 that the acquired outsourcing agreements may be considered to provide an organized workforce and that the acquirer should consider whether the acquired outsourcing agreements perform a substantive process; (iv) explain, in the Basis for Conclusions of the proposed amendments that where an entity acquires a supplier that then ceases generating revenues, because all output is consumed by the acquirer, the supplier would still be 'capable of' generating revenues, and so it might qualify as a business, if the other criteria are met; and (v) add two illustrative examples on how to apply the proposed guidance in the financial sector and in the extractive industries sector.

The IASB expects to issue its Exposure Draft in Q2/2016 and tentatively decided that the comment period for the Exposure Draft should be 120 days.

In addition, the IASB reviewed the due process steps that it has taken in developing the proposed amendments. All of the IASB members confirmed that they are satisfied that the IASB has completed all of the necessary due process steps on the project to date and therefore instructed the staff to commence the balloting process for the Exposure Draft of the proposed amendments. No IASB members indicated an intention to dissent.

Review the IASB Update.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.