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IFRS 3 Business Combinations establishes principles and requirements for how an acquirer in a business combination:

• Recognizes and measures in its financial statements the assets and liabilities acquired, and any interest in the acquiree held by other parties;
• Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and
• Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.

The core principles in IFRS 3 Business Combinations are that an acquirer measures the cost of the acquisition at the fair value of the consideration paid; allocates that cost to the acquired identifiable assets and liabilities on the basis of their fair values; allocates the rest of the cost to goodwill; and recognizes any excess of acquired assets and liabilities over the consideration paid (a ‘bargain purchase’) in profit or loss immediately. The acquirer discloses information that enables users to evaluate the nature and financial effects of the acquisition.

IFRS 3 Business Combinations is Copyright: IFRS Foundation t:M&A IAS 38 Intangible Assets

Hierarchy

ID	Name	Level	x
IFRS	International Financial Reporting Standards	0	IFRS
IFRS03	IFRS 3 Business Combinations	1	IFRS03

Term(s)

ID	Name	Clear	x
IAS38	IAS 38 Intangible Assets		IAS38

IFRS 3 Business Combinations International Financial Reporting Standards 00003 1 Merger, Acquisition, M&A, Financial, Disclosures, Business, Combination, Acquiree IFRS 3 establishes principles and requirements for how an acquirer recognizes the value of the acquired business