The revised IFRS 3 and amended IAS 27
Changes to the IFRSs
The main changes the revised IFRS 3 and amended IAS 27 will make to existing requirements or practice are: •
Partial acquisitions. Non-controlling interests are measured either as their proportionate interest in the net identifiable assets (which is the original IFRS 3 requirement) or at fair value (which is the new requirement in US GAAP). •
Step acquisitions: The requirement to measure at fair value every asset and liability at each step for the purposes of calculating a portion of goodwill has been removed. Instead, goodwill is measured as the difference at acquisition date between the fair value of any investment in the business held before the acquisition, the consideration transferred and the net assets acquired. •
Acquisition-related costs. Acquisition-related costs are generally recognised as expenses (rather than included in goodwill). •
Contingent consideration. Contingent consideration must be recognised and measured at fair value at the acquisition date. Subsequent changes in fair value are recognised in accordance with other IFRSs, usually in profit or loss (rather than by adjusting goodwill). •
Transactions with non-controlling interests . Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for as equity transactions. Changes to US GAAP
The changes made by the FASB to US GAAP are more fundamental than the changes we have made to IFRSs. Among the more significant of the changes it has made, all of which bring US GAAP into line with existing IFRSs, are: •
classifying non-controlling interests as equity.
requiring restructuring charges to be accounted for as they are incurred, rather than allowing these to be anticipated at the time of the business combination. •
requiring in-process research and development (IPR&D) to be recognised as a separate intangible asset, rather than immediately written off as an expense....
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