IFRS
5.13.205.60 Under the first approach in 5.13.205.40, management of Newco concludes that a business combination has occurred in which Newco is the acquirer (as the vehicle for the new shareholders). Accordingly, Newco applies IFRS 3 to the acquisition of both Y and Z.
5.13.205.70 Under the second approach in 5.13.205.40, the transaction is analysed as follows.
• It is a business combination amongst entities under common control.
• Newco chooses to apply book value accounting (see 5.13.50.20) - i.e. Newco elects to account for both Y and Z on the basis of book values.
5.13.205.80 Under the second approach, Newco chose to apply book value accounting; as a result, it was not necessary for Y or Z to be identified as the acquirer. However, if Newco had chosen to apply IFRS 3 accounting (see 5.13.50.20), and assuming that based on the facts and circumstances in this example Y was determined to be the acquirer, then acquisition accounting would have been applied to Z.5.13.200.120 Additionally, similar transactions should be accounted for on a similar basis. In Example 17B, this means that a single accounting policy would be applied to the transfer of the X group of companies to Newco. [IAS
5.13.210 LEGAL MERGERS AND AMALGAMATIONS
5.13.210.10 For purposes of the discussion that follows, a 'merger' is a transaction that involves the combination of two or more entities in which one of the legal entities survives and the other ceases to exist, or in which both existing entities cease to exist and a new legal entity comes into existence.
5.13.210.20 A merger can occur for a number of reasons, including achieving a tax benefit or to facilitate a listing.
EXAMPLE 1819 - TYPES OF MERGERS OR AMALGAMATIONS
5.13.210.30 Company P forms a Newco and acquires Company S from a third party in exchange for cash. S is a holding company and the only asset that it holds is a 100% investment in operating Company X. Shortly after the acquisition, Newco and S
5.13.205.70 Under the second approach in 5.13.205.40, the transaction is analysed as follows.
• It is a business combination amongst entities under common control.
• Newco chooses to apply book value accounting (see 5.13.50.20) - i.e. Newco elects to account for both Y and Z on the basis of book values.
5.13.205.80 Under the second approach, Newco chose to apply book value accounting; as a result, it was not necessary for Y or Z to be identified as the acquirer. However, if Newco had chosen to apply IFRS 3 accounting (see 5.13.50.20), and assuming that based on the facts and circumstances in this example Y was determined to be the acquirer, then acquisition accounting would have been applied to Z.5.13.200.120 Additionally, similar transactions should be accounted for on a similar basis. In Example 17B, this means that a single accounting policy would be applied to the transfer of the X group of companies to Newco. [IAS
5.13.210 LEGAL MERGERS AND AMALGAMATIONS
5.13.210.10 For purposes of the discussion that follows, a 'merger' is a transaction that involves the combination of two or more entities in which one of the legal entities survives and the other ceases to exist, or in which both existing entities cease to exist and a new legal entity comes into existence.
5.13.210.20 A merger can occur for a number of reasons, including achieving a tax benefit or to facilitate a listing.
EXAMPLE 1819 - TYPES OF MERGERS OR AMALGAMATIONS
5.13.210.30 Company P forms a Newco and acquires Company S from a third party in exchange for cash. S is a holding company and the only asset that it holds is a 100% investment in operating Company X. Shortly after the acquisition, Newco and S