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    Mergers and acquisitions – Buying a business

    Accounting for combinations under IFRS® Accounting Standards

    event 18 Mar, 2021

    As the world begins to emerge from the COVID-19 pandemic, merger and acquisition (M&A) activity is on the rise.

    A significant early step for any business considering an acquisition is to look at the accounting treatment. Companies should be aware of the accounting requirements before the transaction takes place so the implications can be considered as the deal is being negotiated.

    In this podcast, Andrea Schriber and Julia LaPointe look at the relevant IFRS Standards, including IFRS 3 Business Combinations, and address three key points that companies should consider in accounting for any acquisition.

    • Does the transaction meet the IFRS 3 definition of a business combination?
    • What are the key accounting considerations for the transaction?
    • What goes on to your balance sheet?

    You can also catch up with the other podcasts in our M&A series:

     

    Listen on  >  Apple podcasts  > Spotify  > Google Podcasts

    The first step is really to determine whether for accounting purposes there is a business combination in the scope of IFRS 3 ... If not, you may have just acquired some assets, which results in a different accounting outcome.

    Andrea Schriber

    Another key step is to decide what is part of the business combination and what’s actually a separate transaction? For example, if there are already relationships between the acquirer and the acquiree – like revenue contracts or leases – the settlement of those relationships has to be accounted for separately from the business combination.

    Julia LaPointe

    Director, KPMG International Standards Group

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