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IFRS 3 — Measurement of non-controlling interests

Date recorded:

The IFRIC considered the comment letters received to the proposed amendments of IFRS 3 Business Combinations to clarify that the option to measure NCI at the proportionate share of the acquiree's identifiable net assets should be applied only to those NCI components that are present ownership instruments and entitle their holders to a pro-rata share on the entity's net assets.

Some IFRIC members felt that the amendment should be broader, considering not only this issue but the interplay of NCI with goodwill, impairment, and potentially even definition of equity. Nonetheless, the Chairman noted that this was a narrow amendment that should only clarify an inconsistency and not address all concerns and implications IFRS 3 might have created. He warned that IFRIC should not try to address all the known issues with IFRS 3 within that amendment. Two IFRIC members disagreed with this assessment and continued to support a broader project considering wider implications.

After a short discussion, in which several IFRIC members noted that this improvement might change the current practice and could have further implications, the IFRIC finally supported the staff proposal to proceed with the amendments. The IFRIC agreed with drafting suggestions making the amendment more clear and agreed to resolve several remaining inconsistencies between the proposed Basis for Conclusions and the amendment itself.

The discussion continued with identification of instruments to which the 'present ownership instruments representing proportional share in net assets' definition applied. The IFRIC agreed that it would be predominantly ordinary shares, with possible inclusion of specific types of preference shares in a limited number of jurisdictions.

On that basis, the IFRIC recommended to the Board to finalise the amendments subject to editorial drafting suggestions.

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