CERTYNEX IFRS ACADEMY

Cèdre SA acquires the majority of the voting rights of a business (within the meaning of IFRS 3). Case convention: the three elements of control under IFRS 10 are present. How do the two standards fit together in accounting for this acquisition?

IFRS 10 on its own covers the accounting for the acquisition, including measurement of the assets and liabilities acquired, IFRS 3 relating to legal mergers.

IFRS 3 applies first to identify the acquirer, then IFRS 10 decides whether the acquisition leads to consolidation of the acquired business.

IFRS 3 applies to any acquisition of securities of an entity, whether or not it gives control, the definition of control having no effect.

IFRS 10 provides the definition of control; obtaining control of a business triggers the application of IFRS 3 (acquirer, acquisition date, measurement).