IFRS 3 and IAS 17 Coursework Example | Topics and Well Written Essays - 2250 words

IFRS 3 and IAS 17 - Coursework ExampleMajor issues of the business combination are analyzed hereunder in exhibition to determine the style, character, and extent with which those have been dealt with by IFRS3.The process of accounting and reporting of the business combination is stated with absolute clarity under IFRS 3 in particular after its revision in January 2008. IFRS 3 categorically states that only purchase method shall be applied for accounting and reporting for acquisitions. The standard has in a simple fashion established four following stages for applying the purchase method to regulate the acquisitionsThis standard is not applicable to joint ventures, acquisition of asset or group of assets, and combinations of entities under common control that are not transitory, an involvement of two or more mutual entities, and formation of a reporting entity for corporate trust entities or businesses without ownership interests. In other words, only those combinations are attracte d under this standard that involves a transfer of controlling interests with the acquirer. Acquirer gets these controlling powers in the proceeds of ways as underThat is why IFRS 3 makes it compulsory to identify an acquirer. Acquirer as per IAS 27 is the one who has control over the financial and operate policies of the acquired entity, and these powers can be obtained in the following ways, among othersA revised version of IFRS 3 has eliminated whatever ambiguity was there in the original version. IFRS 3 describes the median(a) value of an asset or a liability as the amount that is exchangeable at arms length transaction between parties having murder knowledge of that asset or liability. Hence the cost of acquisition is the fair value of net assets assumed (that is the fair value of identified assets including intangible assets decreased by identified liabilities including contingent liabilities) and equity instruments issued by the acquirer in exchange of control of acquiree plus the cost directly attributable to the acquisition.