Definition of a business and previously held interests
27 July 2016
The International Accounting Standards Board (IASB) has published Exposure Draft ED/2016/01 Definition of a Business and Accounting for Previously Held Interests (the ED).
In this ED the IASB proposes to amend IFRS 3 Business Combinations and IFRS 11 Joint Arrangements. It is proposed to clarify:
a) the definition of a business; and
b) the accounting for previously held interests when an entity obtains control of a business that is a joint operation and when it obtains joint control of a business that is a joint operation.
The IASB invites comments on any aspects of this Exposure Draft, particularly on the following topics:
- the proposal that, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the set of activities and assets is not a business;
- differences between the IASB’s and FASB’s proposals of amendments and differences in practice that could emerge from the different wording;
- acquisitions of interests in business that are joint operations; and
- the proposal for prospective application (with early application permitted) of the amendments to the definition of a business and the accounting for previously held interests.
The comment deadline for ED/2016/1 Definition of a Business and Accounting for Previously Held Interests is 31 October 2016.
This bulletin deals with proposed changes to IFRS 3 regarding the definition of a business and the accounting for previously held interests.
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