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Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) [Completed]

Effective date:

The amendments published today are effective for annual periods beginning on or after January 1, 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.

Last updated:

May 2020

 

Overview

IFRS 3, Business Combinations specifies how an entity should account for the assets and liabilities it acquires when it obtains control of a business. IFRS 3 requires an entity to refer to the Conceptual Framework for Financial Reporting (Conceptual Framework) to determine what constitutes an asset or a liability.

Originally, IFRS 3 required an entity to refer to the version of the Conceptual Framework that existed when IFRS 3 was developed. The purpose of this project was to update IFRS 3 to require an entity to refer instead to a later version issued in March 2018.

The Board completed this project in May 2020 by issuing amendments to IFRS 3. The amendments updated the reference to the Conceptual Framework. They also added to IFRS 3 an exception to its requirement for an entity to refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The Board added this exception to avoid an unintended consequence of updating the reference. Without the exception, an entity would have recognized some liabilities on the acquisition of a business that it would not recognize in other circumstances. Immediately after the acquisition, the entity would have had to derecognize such liabilities and recognize a gain that did not depict an economic gain.

The Board expects this exception to remain in IFRS 3 for as long as the definition of a liability in IAS 37 differs from the definition in the latest version of the Conceptual Framework. The Board plans to consider aligning the definitions as part of a project to make targeted improvements to IAS 37.

The amendments to IFRS 3 are effective for business combinations occurring in reporting periods starting on or after January 1, 2022. Earlier application is permitted.

 

Other de­vel­op­ments

May 2020

On May 14, 2020, the IASB published Reference to the Conceptual Framework (Amendments to IFRS 3) with amendments to IFRS 3, Business Combinations that update an outdated reference in IFRS 3 without significantly changing its requirements.

March 2020

On March 27, 2020, the IASB staff updated the work plan to indicate that the Board expects to issue the IFRS Amendments in May 2020.

January 2020

On January 31, 2020, the IASB staff updated the Work Plan to indicate that the IASB expects to issue the Amendments to IFRS 3 in April 2020.

December 2019

On December 13, 2019, the IASB staff updated the Work Plan to indicate that the IASB plans to issue the Amendments to IFRS 3 in Q2/2020. 

November 2019

On November 25, 2019, the IASB staff updated the Work Plan to indicate that the Board plans to issue an Amendment to IFRS 3 (no date specified yet). 

June 2019

On June 14, 2019, the Accounting Standards Board (AcSB) issued an Exposure Draft which corresponds to the IASB’s Exposure Draft on this topic. Com­ments are re­quested by Sep­tem­ber 27, 2019.

May 2019

On May 30, 2019, the International Accounting Standards Board (the Board) published an exposure draft "Reference to the Conceptual Framework (Proposed amendments to IFRS 3)" with three proposed amendments to IFRS 3 "Business Combinations" that would update an outdated reference in IFRS 3 without significantly changing its requirements. Comments are requested by September 27, 2019.

April 2019

On April 12, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in June 2019.

January 2019

On January 25, 2019, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in Q2/2019.

December 2018

On December 14, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue an Exposure Draft in the first half of 2019.

 

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