IFRS 3 summary and timeline
A summary of IFRS 3 Business Combinations, including information on current proposals and a timeline of past amendments, announcements, exposure drafts and consultations.
Summary
- Business combinations are accounted for using the acquisition method
- Goodwill is measured as the excess of the aggregate of:
- consideration transferred,
- the non-controlling (minority) interest, and
- fair value of any previously held equity interest in acquiree,
over the identifiable net assets of the acquiree.
The non-controlling (minority) interest is measured at acquisition either at fair value or as a proportion of the fair value of the net assets of the acquiree.
Current proposals
- As a result of the post-implementation review of IFRS 3 the IASB has initiated a project to consider whether amendments should be made to IFRS 3 and IAS 36 to:
- improve disclosures about acquired businesses, and
- simplify accounting for goodwill
- improve aspects of the impairment test for goodwill.
An Exposure Draft IASB/ED/2024/1 Business Combinations – Disclosures, Goodwill and Impairment was published in March 2024.
- IFRS 3 does not provide guidance on the applicable accounting treatment where entities in a business combination are controlled by the same party. A project is underway to explore how companies should account for such transactions.
A discussion paper was issued in November 2020.
Timeline
| Date | Update |
|---|---|
| 19 May 2020 | IASB issues Reference to the Conceptual Framework - amendments to IFRS 3 Effective for annual periods beginning on or after 1 January 2022. |
| 19 March 2020 | IASB issues discussion paper on Business Combinations – Disclosures, Goodwill and Impairment |
| 30 May 2019 |
IASB proposes amendments to IFRS 3 in ED/2019/3 Reference to the Conceptual Framework – proposed amendments to IFRS 3 |
| 22 October 2018 | IASB issues Definition of Business amendments to IFRS 3 Effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning on or after 1 January 2020 and to asset acquisitions that begin on or after the beginning of that period. Narrow scope amendments help companies determine whether an acquisition made is of a business or a group of assets. |
| 12 December 2017 | IASB issues Annual Improvements to IFRS Standards 2015 – 2017 Effective for annual periods beginning on or after 1 January 2019. |
| 12 December 2013 | IASB issues Annual Improvements to IFRSs 2010–2012 and 2011–2013 Cycles, both of which amend IFRS 3 Annual Improvements to IFRSs 2010-2012 amendment effective for business combinations on or after 1 July 2014; Annual Improvements to IFRSs 2011-2013 amendment effective for annual periods beginning on or after 1 July 2014. |
| 6 May 2010 | IASB issues Annual Improvements to IFRSs 2010 (Amendments to IFRS 3) Effective for annual periods beginning on or after 1 July 2010. |
| 10 January 2008 | IASB issues IFRS 3 (2008), a revised version of the standard Effective for business combinations on or after the beginning of the first annual period beginning on or after 1 July 2009. |
| 31 March 2004 | IASB issues IFRS 3 Effective for business combinations on or after 31 March 2004. |
Looking for the standard?
Practical guidance on this standard is now on our main IFRS 3 Business Combinations page, with links to eIFRS, the full text standard, eBooks and other resources.
