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IFRS 3Workpapers (Step 4 of 5)

Workpaper template

Step 4 of 5
WorkpaperIFRS 3 — Business CombinationsL1 · L2 · L3 · L4

Identifying a business combination: scope of the standard, business or group of assets, common control, acquirer and acquisition date

7 missions6 sections to document60 min
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Status
Published

Objective of the workpaper

Describe the transaction and the items acquired, check the exclusions from the scope, assess the inputs and processes (and, if the acquirer so elects, the concentration test), identify the acquirer and the date on which control is obtained, then support each judgment. Amounts, percentages and dates are case data: no threshold is presented as imposed by the standard.

6 sections · 20 blocks · 0 calculations · 0 entries

  • IFRS 3 §2
  • IFRS 3 §B1
  • IFRS 3 §B7
  • IFRS 3 §6
  • IFRS 3 §7
  • IFRS 3 §B15
  • IFRS 3 §8
  • IFRS 3 §9
  • IFRS 3 §B19

Work this workpaper as a mission

Each case that uses this template opens in the mission workspace: data, analysis, calculation, entries, conclusion and review, with your progress saved.

7 instances from the cases: the calculations and entries below are run by the calculation engine.

File and entity
Acquisition of an activity: business or group of assets? Scope exclusions, inputs and processes, concentration test, acquirer and acquisition date
Case tasks documented here
  • Do the three transactions A, B and C fall within the scope of IFRS 3? Rule out those that are excluded and justify.
  • Transaction A: compute the fair value of the gross assets acquired, apply the optional concentration test and conclude: business or acquisition of assets?
  • Transaction B: is the set acquired a business? Identify the inputs and processes and assess the accounting and payroll contract.
  • Transaction C: does common control place the transaction outside the scope?
  • Transaction B: identify the acquirer and justify.
  • Transaction B: determine the acquisition date taking the agreements and the facts into account.
1

Facts and data

Inputs

  • Description of the transaction: parties, subject, price, written agreements

    TextRequired

    OFFICE_BUILDING_LET_NO_WORKFORCE_NO_PROCESS

  • Items acquired: assets, activities, workforce, contracts and processes

    TextRequired

    LAND_BUILDING_AND_LEASES_IN_FORCE

  • Fair value of the gross assets acquired (for the concentration test)

    Number

    5,000,000

  • Fair value of the largest single identifiable asset or group of similar identifiable assets

    Number

    4,800,000

  • Share of the voting rights of the combined entity held by the owners of the entity obtaining control (%)

    Number

  • Composition of the governing body and senior management, and terms of the exchange of securities

    Text

  • Ultimate control of the entities before and after the transaction and duration of that control

    Text

  • Facts on the date control is obtained: closing, approvals, written agreements, transfer of voting rights

    Text

2

Supporting documents

Evidence

  • Documents obtained and referenced (acquisition agreement, inventory of items acquired, valuations)

    EvidenceRequired

3

Analysis of the transaction

Analysis

IFRS 3 §2IFRS 3 §B1IFRS 3 §B7IFRS 3 §6IFRS 3 §7IFRS 3 §B15IFRS 3 §8IFRS 3 §9IFRS 3 §B19

  • Points reviewed: scope, business, acquirer and date

    ChecklistRequired

    • Scope exclusions checked: formation of a joint arrangement, acquisition of assets that are not a business, combination under common control
    • Inputs and processes acquired listed; accounting, billing and payroll not retained as processes creating outputs
    • Choice to apply or not the optional concentration test recorded; conclusion drawn without a numerical threshold
    • Acquirer identified from control, that is the entity that obtains control of the acquiree
    • If control does not clearly designate the acquirer: voting rights, governing body, large minority, terms of the exchange
    • Acquisition date retained = date control is obtained, based on all facts and circumstances
    • Reverse acquisition ruled out or retained: the entity issuing the securities is not always the accounting acquirer
4

Judgments: business, acquirer, common control and date

Judgment

IFRS 3 §2IFRS 3 §B1IFRS 3 §B7IFRS 3 §6IFRS 3 §7IFRS 3 §B15IFRS 3 §8IFRS 3 §9IFRS 3 §B19

  • Nature of the set acquired

    JudgmentRequired

    Acquisition of assets that is not a business

    Business: an input and a substantive process acquired / Acquisition of assets that is not a business / Formation of a joint arrangement (outside the scope)

    Professional judgment: the standard does not quantify the substantially all of the fair value concentrated in one asset; no percentage is imposed and the conclusion is supported by the facts.

  • Rationale: inputs, processes, concentration test if applied

    Text

    CONCENTRATION_TEST_SATISFIED_SINGLE_ASSET

  • Identification of the acquirer

    JudgmentRequired

    Not applicable: transaction outside the scope or acquisition of assets

    Control clearly designates the acquirer / Additional indicators used (voting rights, management, exchange) / Reverse acquisition: the legal acquirer is the accounting acquiree / Not applicable: transaction outside the scope or acquisition of assets

  • Rationale: control, voting rights, management and exchange of securities

    Text

  • Common control

    JudgmentRequired

    Common control that is not transitory: transaction outside the scope / No common control: transaction within the scope / Not applicable

    Professional judgment: whether control is transitory is not defined by a duration; it is assessed on the facts.

  • Rationale: parties controlling before and after, duration of control

    Text

  • Acquisition date

    JudgmentRequired

    Closing date of the transaction: control obtained on that date / Other date: control obtained earlier or later based on the facts / Not applicable

  • Rationale: written agreements, approvals and transfer of control

    Text

5

Conclusion

Conclusion

  • Nature of the transaction, acquirer and acquisition date retained, with the evidence and the judgments

    ConclusionRequired

6

Normative references

References

  • Normative references cited in this workpaper

    References

7

Checks and financial statement impact

  • Nature of the set acquired judgedPass
  • Acquirer identified or not applicable with reasonsPass
Assets
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Liabilities
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Profit or loss
0
OCI
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Equity
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