ACC 703 Chapter Notes - Chapter 3: Historical Cost, Book Value, Equity Method
18 Sep 2014
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7: explain a reverse takeover and its reporting implications. Identify some of the differences between ifrs and aspe for business combinations. A business combination is defined in ifrs 3 as a transaction or other event in which an acquirer obtains control of one or more businesses. This definition has two key aspects: control and businesses. When a business combination does occur, the requirements of ifrs 3 must be applied. On the other hand, if an entity acquires all of the assets of another entity but they do not meet the definition of a business, ifrs 3 would not be applicable. Instead, the assets acquired would be treated as a basket purchase, and the total cost would be allocated to the individual assets in proportion to their fair market values. There are many types of business combinations including a conglomerate business combination, a horizontal business combination, and a vertical business combination.
