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The International Accounting Standards Board has published for public consultation proposed narrow-scope amendments to IFRS 3 business combinations.
The IASB has proposed to update the conceptual framework reference in IFRS 3, without changing the accounting requirements for business combinations, so that it refers to the version which was issued in March 2018.
IFRS 3 specifies how a company should account for the assets and liabilities it acquires when it obtains control of a business. It refers companies to the board’s conceptual framework to determine what constitutes an asset or a liability.
Currently, IFRS 3 refers to an old version of the conceptual framework.
"Updating the reference without making any other changes to IFRS 3 could change the accounting requirements for business combinations because the liability definition in the 2018 conceptual framework is broader than that in previous versions," said the IASB.
"Companies would need to record provisions and contingent liabilities when they acquire a business they would not record in other circumstances. To avoid this, the board also proposes that for provisions and contingent liabilities, companies refer to IAS 37 provisions, contingent liabilities and contingent assets instead of the conceptual framework to determine what constitutes a liability," it said.
The IASB is proposing retain this change until it decides whether and how to amend IAS 37 to align it with the 2018 conceptual framework.
The comment deadline is 27 September.