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IFRS 3 — Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised IFRS

Date recorded:

The IFRIC discussed the comment letters to the Board proposals. The IFRIC agreed with the concerns of some constituents that the new guidance referred to the superseded requirements of IFRS 3 (2004) and agreed to reproduce the guidance within the transitional requirements of this amendment.

On application, the IFRIC agreed that the proposed amendment be applied from the application of IFRS 3 Business Combinations (2008). The IFRIC acknowledged that early adopted of IFRS 3 (2008) that had applied IAS 39 Financial Instruments: Recognition and Measurement to contingent considerations balances from earlier business combinations would have to restate the balances (revert to original IFRS 3 (2004) treatment). The IFRIC noted that this requirement would provide better comparability.

On the other hand, a majority of the IFRIC agreed that first-time adopters should account for subsequent changes in these balances in accordance with IAS 39 if they relate to financial assets or financial liabilities.

Some IFRIC members expressed their view that such approach was overly burdensome for early adopters and were concerned that the IFRIC would send a wrong signal regarding early adoption of new standards.

After a short discussion the IFRIC recommended to the Board to finalise the amendments subject to editorial drafting suggestions.

The IFRIC also asked the Board to consider whether it would be more efficient to have all the related guidance to contingent considerations within one Standard.

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