ACCA has responded to an invitation to comment from the International Accounting Standards Board on its draft definition of a business and accounting for previously held interests.
ACCA’s response to the exposure draft to amend IFRS3 on the definition of a business is attached.
The ED should help clarify the problems that have arisen in practice over what is the acquisition of a business and what is the purchase of assets.
The significance is that business combinations unlike asset deals follow IFRS3 with an assessment of fair values and the potential to recognise intangibles and goodwill.
The guidance would be more extensive than currently including a decision process and examples. ACCA’s view is generally supportive but suggests some further clarifications.