SIC-28 — Business Combinations – 'Date of Exchange' and Fair Value of Equity Instruments


  • IAS 22 Business Combinations


  • SIC D28 was issued July 2001.
  • Final SIC-28 was approved by the IASB in December 2001.
  • Effective Date: Acquisitions given initial accounting recognition on or after 31 December 2001
  • Superseded by, and incorporated into, IFRS 3 Business Combinations, effective 31 March 2004.

Summary of SIC-28

SIC-28 addresses when the 'date of exchange' occurs where shares are issued as purchase consideration in an acquisition. SIC-28 provides that if an acquisition is achieved in one exchange transaction (not in stages), the 'date of exchange' is the date of acquisition — that is, the date when the acquirer obtains control over the net assets and operations of the acquiree. When an acquisition is achieved in stages (for instance, successive share purchases), the fair value of the equity instruments issued as purchase consideration at each stage should be determined at the date that each individual investment is recognised in the financial statements of the acquirer.

SIC-28 also addresses when it is appropriate to consider other evidence and valuation methods in addition to a published price at the date of exchange of a quoted equity instrument. The Interpretation states that the published price at the date of exchange provides the best evidence of the instrument's fair value and should be used, except in rare circumstances. Other evidence and valuation methods should also be considered only in the rare circumstance when it can be demonstrated that the published price at that date is an unreliable indicator, and the other evidence and valuation methods provide a more reliable measure of fair value. The published price at the date of exchange is an unreliable indicator only when it has been affected by an undue price fluctuation or a narrowness of the market.

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.