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ACC 703 (19)
Chapter 3

Chapter 3 Summary

3 Pages

Course Code
ACC 703
Julie Mc Donald

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Chapter3BusinessCombinationsLearning ObjectivesAfter studying this chapter you should be able to do the following1Define a business combination and evaluate relevant factors to determine whether control exists in a business acquisition2Describe the basic forms for achieving a business combination3Prepare and compare consolidated balances sheets under the acquisition and newentity methods4Apply the acquisition method to a purchaseofnetassets business combination5Apply the acquisition method to a purchaseofshares business combination6Analyze and interpret financial statements involving business combinations7Identify some of the differences between IFRS and ASPE for business combinations8Explain a reverse takeover and its reporting implicationsWhat You Really Need To KnowA 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 valuesThere are many types of business combinations including a conglomerate business combination a horizontal business combination and a vertical business combination Other terms that are often used synonymously with the term business combination are takeover amalgamation acquisit
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