Definition of a Business, a potential amendment to IFRS 3 - IASB

Date recorded:

At its meeting on October 22, 2015, the IASB discussed an analysis of the FASB’s project proposals on how to clarify the definition of a business and related application guidance, and to consider whether the same proposals should be made to IFRS 3. The IASB tentatively decided: (i) to clarify that to be considered a business, an acquired set of activities and assets (a set) must include, at a minimum, an input and a substantive process that together contribute to the ability to create outputs; (ii) to remove the requirement that a set is a business if market participants can replace the missing elements and continue to produce outputs; (iii) to not consider as a business a set in which substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets; (iv) to revise the definition of outputs to focus on goods and services provided to customers; (v) to add examples to help preparers to interpret what is considered a business; and (vi) that an entity would be required to apply the proposed amendments to IFRS 3 prospectively.

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