Business PFRS for SMEs FULL PFRS

Combination

Scope SAME SAME

Combinations involving entities or businesses under Same scope exclusion as IFRS fo
common control or formation of a joint venture are SMEs. [IFRS 3R.2]
excluded from the scope. [IFRS for SMEs 19.2]

Definition Combination of separate entity Acquirer obtains control

bringing together of separate entities into one reporting of one or more businesses.
entity

Acquisition Obtains control SAME

Date

Accounting Acquisition Method SAME

a) identifying an acquirer.  1.    1. Identification of the 'acquirer'
b) measuring the cost of the business combination.  2.     2. Determination of the 'acquisition
c) allocating, at the acquisition date, the cost of the 3.     3. Recognition and measurement o
business combination to the assets acquired and identifiable assets acquired, the
liabilities and provisions for contingent liabilities liabilities assumed and any non-
assumed.
controlling interest (NCI, formerl
called minority interest) in the ac
4.     4. Recognition and measurement o
goodwill or a gain from a bargain
purchase

Acquirer SAME *diff indicators SAME *diff indicators

Control is the power to govern the financial and
operating policies of an entity or business so as to
obtain benefits from its activities. Control of one entity
by another

 a) if the FV of one of the combining entities is > that of

the other combining entity, the entity with the greater
fair value is likely to be the acquirer.

b) if the business combination is effected through an

exchange of voting ordinary equity instruments for cash
or other assets, the entity giving up cash or other
assets is likely to be the acquirer.

c) if the business combination results in the

management of one of the combining entities being
able to dominate the selection of the management
team of the resulting combined entity, the entity whose
management is able to dominate is likely to be the
 acquirer.

Cost of Assets, Liabilities, Equity, and Directly Attributable SAME but Transaction Costs a
Acquisition Costs at FV expensed
The cost of a business combination includes the fair
value of assets given, liabilities incurred or assumed
and equity instruments issued by the acquirer, in
exchange for the control of the acquiree, plus any
directly attributable costs.
FV Net Assets + Directly Attributable Costs
  Business PFRS for SMEs
Combination
Adjustments to Recognized if probable and can be
Business measured reliably
Combination Contingent consideration is included as part of
Costs Contingent the cost at the date of the acquisition if it is
on Future Events probable (that is, more likely than not) that the
amount will be paid and can be measured
reliably. If such adjustment is not recognised
at the acquisition date but becomes probable
afterwards, the additional consideration
adjusts the cost of the combination. [IFRS for
SMEs 19.12-19.13]
3. Allocating the The acquirer recognises separately the
cost of a business acquiree’s identifiable assets, liabilities and
contingent liabilities that existed at the date of
acquisition. These assets and liabilities are
generally recognised at fair value at the date
of acquisition. [IFRS for SMEs 19.14]
Goodwill Cost - Amort - Imp Loss
Goodwill (the excess of the cost of the
business combination over the acquirer’s
interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities) is
recognised as an intangible asset at the
acquisition date. After initial recognition, the
goodwill is measured at cost less accumulated
amortisation and any accumulated impairment
losses. Goodwill is amortised over its useful
life, which is presumed to be 10 years if the
entity is unable to make a reliable estimate of
the useful life.
FULL PFRS
Recognized regardless of
probability
Contingent consideration is
recognised initially at fair value as
either a financial liability or equity
regardless of the probability of
payment. The probability of payment
is included in the fair value, which is
deemed to be reliably measurable.
Financial liabilities are re-measured
to fair value at each reporting date.
Changes in the fair value of
contingent consideration that are not
measurement period adjustments are
recognised either in profit or loss or
in other comprehensive income.
Equity-classified contingent
consideration is not re-measured at
each reporting date; its settlement is
accounted for within equity. [IFRS
3R.39, 3R.58]
Similar to IFRS for SMEs; however,
the exception to fair value
measurement also applies for
reacquired rights (based on
contractual terms), replacement of
share-based payment awards (in
accordance with IFRS 2), income tax
(IAS 12, ‘Income taxes’), employee
benefits (IAS 19, ‘Employee
benefits’) and indemnification assets.
Consideration + NCI + FV of
equity interest - NA recognized
Goodwill is measured as the
difference between:
the aggregate of (i) the value of the
consideration transferred (generally
at fair value), (ii) the amount of any
non-controlling interest (NCI, see
below), and (iii) in a business
combination achieved in stages (see
below), the acquisition-date fair value
 of the acquirer's previously-held
equity interest in the acquiree, and
the net of the acquisition-date
amounts of the identifiable assets
acquired and the liabilities assumed

Scope of CSF Based on control or voting power/rights  SAME + guidance to voting rights
IFRS for SMEs focuses on the concept of Same as IFRS for SMEs; in addition,
control in determining whether a IFRS provides extensive guidance on
parent/subsidiary relationship exists. All potential voting rights, which are
subsidiaries are consolidated. Control is assessed. Instruments that are
presumed to exist when a parent owns, currently exercisable or convertible
directly or indirectly, more than 50% of an are included in the assessment.
entity’s voting power.

NCI presentation *BS, P/L AND TCI to NCI and Parent’s SAME
SCI

NCIs are presented as a separate component

of equity in the balance sheet. Profit or loss
and total comprehensive income are attributed
to NCIs and owners of the parent in the
statement of comprehensive income.

Accounting Uniform SAME

Policies Consolidated financial statements are
prepared by using uniform accounting policies
for like transactions, and events in similar
circumstances, for all of the entities in a group.

Disclosures Information/Description regarding the SAME

business combination should be disclosed.
shall disclose the following:
a) the names and descriptions of the
combining entities or businesses.
b) the acquisition date.
c) the percentage of voting equity instruments
acquired.
d) the cost of the combination and a
description of the components of that cost
(such as cash,
equity instruments and debt instruments).
e) the amounts recognized at the acquisition
date for each class of the acquiree’s assets,
liabilities and contingent liabilities, including
goodwill.
f) the amount of any excess recognized in
profit or loss in accordance with paragraph
287 and the line item in the statement of
income in which the excess is recognized.
g) If the initial accounting for business
combination is incomplete (see paragraph
284), the fact that the amounts have been
determined only provisionally.

For all business combinations

An acquirer shall disclose a reconciliation of
the carrying amount of goodwill at the
beginning and end of the reporting period,
showing separately:
a) changes arising from new business
combinations
b) amortization
c) impairment losses
d) disposals of previously acquired
businesses.
e) other changes
This reconciliation need not be presented for
prior periods.