IFRS-3 – Business Combinations

The objective of this IFRS is to specify the financial reporting by an entity when it undertakes a business combination. The acquirer is the combining entity that obtains control of the other combining entities or businesses.

The acquirer shall measure the cost of a business combination as the aggregate of:

(a) the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree; plus; (b) any costs directly attributable to the business combination. The acquirer shall at the acquisition date: (a) recognize goodwill acquired in a business combination as an asset; and (b) initially measure that goodwill at its cost, being 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.