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Deloitte comment letter on Tentative Agenda Decision - IFRS 3 and IFRS 2 - Accounting for reverse acquisitions that do not constitute a business

Published on: Jan 22, 2013

Deloitte's IFRS Global Office has submitted a letter of comment responding to the IFRS Interpretation Committee's tentative decision published in the November 2012 IFRIC Update not to add to its agenda a request for clarification of the accounting for transactions in which the former shareholders of a nonlisted operating entity become the majority shareholders of the combined entity by exchanging their shares for new shares of a listed nonoperating entity that does not constitute a business.

We agree with the IFRS Interpretations Committee’s decision not to add this item to its agenda, but we present in the comment letter the following ways the decision could be made clearer:

  • specifying that the statement that “on the basis of the guidance in paragraph B7 of IFRS 3, the listed non-operating entity is not a business” is an assumption, rather than a conclusion reached based on the description of the transaction (as currently drafted, the description does not include enough detail to reach that conclusion as it only states that the entity is ‘non-operating’); and
  • stating the reason why a stock exchange listing does not meet the definition of an intangible asset under IAS 38.

Download the full comment letter below.


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