EFRAG comments on IFRS 3 proposals
28 Nov 2005
In June 2005, the IASB and the FASB jointly published exposure drafts that would amend their business combinations standards (IFRS 3 and SFAS 141, both titled Business Combinations).
Having evaluated the proposals as a whole in the light of the comments received on the draft comment letter we issued in early August, we do not support the proposals in the EDs. That is because we believe that the proposed approach does not produce more useful information than the current IFRS 3; indeed in many respects we believe that it will have the opposite effect. In addition it will create major practical implementation issues. We also believe that it is inappropriate to introduce such radical and untested concepts through revision to specific standards at a time when the conceptual framework is under active review. Our recommendation to the IASB and FASB is therefore that they should concentrate for the time being on simply doing what they set out to do, i.e. converging the existing standards to the better accounting solution, which we believe to be IFRS 3 (subject perhaps to some minor improvements to achieve convergence and to address certain practical aspects linked with the application of the acquisition method). |
Summarising our concerns, we believe the proposed changes:
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