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Definition of a Business, proposed amendments to IFRS 3 [ED]

Comment period ended October 31, 2016

Next steps:

The Board plans to issue the final amendments to IFRS 3 in September 2018

Last updated:

July 2018

Reach out to our IFRS 3 Specialist

Sean Morrison

Overview

In 2014 and 2015, the Board carried out a Post-implementation Review (PIR) of IFRS 3. That review identified that stakeholders find it difficult to apply the definition of a business in IFRS 3.

Defining a business is important. This is because the financial reporting requirements for the acquisition of a business are different from the requirements for the purchase of a group of assets that does not constitute a business. The proposed amendments are intended to provide entities with clearer application guidance to help distinguish between a business and a group of assets when applying IFRS 3.

Because IFRS 3 is the result of a joint project between the Board and the FASB, the business combinations requirements in the IFRS Standards and US GAAP are substantially converged. The FASB received similar feedback regarding difficulties in applying the definition of a business in a PIR of the corresponding US Standard. Consequently, the FASB and the Board have worked to respond to this feedback and this ED of the proposed amendments to IFRS 3 and the FASB’s Proposed Accounting Standards Update: Clarifying the Definition of a Business, issued in November 2015, are based on substantially converged tentative conclusions.

 

Other developments

July 2018

On July 18, 2018, the IASB® staff updated the work plan to indicate that the Board plans to issue the final amendments to IFRS 3 in September 2018.

May 2018

On May 25, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue the final amendments to IFRS 3 in the second half of 2018.

March 2018 

On March 23, 2018, the IASB® staff updated the work plan to indicate that the Board expects to issue the final amendments to IFRS 3 in June 2018.

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to issue the final amendments to IFRS 3 in Q2/2018. 

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to issue the final amendments to IFRS 3 in the 1st half of 2018.

March 2017

On March 23, 2017, the IASB staff issued an updated Work Plan which indicates that the IASB expects to decide the project direction by June 2017.

January 2017

On January 19, 2017, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction by April 2017.

On January 5, 2017, the FASB issued Accounting Standards Update 2017-01, Clarifying the Definition of a Business, which provides guidance on evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction by March 31, 2017.

On September 15, 2016, the IASB released a Staff Paper from the Accounting Standards Advisory Forum (ASAF) comparing the FASB ED and IASB ED on the definition of a business.

In September 2016, the IASB posted a webcast discussing its proposed amendments to the definition of a business in IFRS 3, Business Combinations. The webcast provides an overview of the proposals, including the two proposed assessment models.

August 2016

On August 8, 2016, the AcSB issued for comment an Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments to the AcSB are requested by October 31, 2016. 

July 2016

On July 20, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to decide the project direction sometime after January 31, 2017. 

June 2016

On June 28, 2016, the IASB issued for comment an ED of proposed amendments to IFRS 3 in respect of the definition of a business.

May 2016

On May 20, 2016, the staff updated the IASB Work Plan to indicate that the Board expects to issue an Exposure Draft in June 2016.

February 2016

In February 2016, the IASB staff updated the Work Plan to indicate that the ED is expected to be issued in May 2016.

 

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