Summary
Summary Group Statements Volume 1 Chapter 2
- Course
- Accounting 200
- Institution
- University Of Johannesburg (UJ)
Basic theory for recognising a group transaction
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Scope of IFRS 3Only applicable to transactions which meet the definition of a business combination.
Identifying a BC
o If acquisition does not constitute BC simply investment (no goodwill amount
excess of fair value pro rata allocated to assets or allocated to specific asset)
o BC can be defined as when the acquirer obtains control of one or more
businesses via transfer of assets, issuing equity or incurrence of liabilities or
combo
o A business is a group of activities and assets which can be managed and
directed to achieve a return or cost saving directly to the management or the
owners. Business consists of inputs, processes and outputs
Acquisition Method
Identifying the Acquirer
Entity which gains control of the other
Entities voting rights play an important role
If BC is effected through asset trans or raising debt the entity committing said actions
is acquirer
Usually the issuer of equity
Usually entity of relatively larger size
Consider who initiates
If new entity formed one of the existing entities was acquirer
Acquisition Date
Date on which control is acquired
Normally date acquirer assumes assets and liabilities or closing date
Some BC’s are subject to suspensive conditions
Recognition and Measurement of assets, liabilities and NCI
Goodwill is separate from A, L and NCI
Recognition conditions
Meet relevant def and rec criteria
Must be part of BC trans
Some assets may have been recognised in pre-rec AFS of acquirer
Classifying assets and liabilities
Classify to facilitate other IFRSs
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