International Financial Reporting Standard 3

from Wikipedia, the free encyclopedia

The International Financial Reporting Standard 3 (IFRS 3) is an accounting standard of the International Accounting Standards Board (IASB), which deals with the accounting of business combinations.

History of origin

IFRS 3 emerged from the IASB Business Combinations - Phase I project and was adopted on March 31, 2004. To date, the old IAS was 22. The development of IFRS 3 must be related to the IAS 36 and IAS 38 be seen that also in the course of the IASB's project Business Combinations - Phase I have been changed. IFRS 3 was then again affected by a reform of group accounting issued in June 2005. The background to this is the harmonization with US GAAP ( Improvements Project ).

Structure of the standard

Only the most important points are mentioned:

  • Scope (IFRS 3.1)
  • Determination of the only permitted acquisition method (IFRS 3.4)
  • Requirements for the application of the purchase method (IFRS 3.5)
  • Comments on this method (IFRS 3.16 - 3.65)
  • Disclosure requirements (IFRS 3.66 - 3.77)
  • Detailed attachments with application notes

Forms of business combinations

According to IFRS 3.3 a is business combination ( business combination) is always present when two separate companies are merged and jointly report from that date. The standard does not apply to companies that are held by the same owner before and after the merger. The merger of subsidiaries is therefore expressly excluded from the scope of IFRS 3. It can be stated that in most cases a merger takes place in such a way that the buyer gains complete control over the acquired company ( classic purchase ).

Business

IFRS 3 defines a business as an integrated group of activities and assets with the help of which interest is to be generated for investors . An essential distinguishing feature is the ability of such a business to generate sales independently.

Asset deal

An asset deal is the situation in which the respective company buyer acquires the individual assets and debts of the target company separately. In this context, the so-called individual legal succession is also used.

The assets and liabilities acquired in this way can be paid for in cash as well as in return for other assets.

Share deal

A share deal is understood to mean the situation in which the respective purchaser acquires a stake in the target company or gains control over it by buying shares (for example, shares). In this case, the company, in which the individual is assets ( assets ) and debt ( liabilities ) interact, taken in its entirety. In this way, those value potentials that are justified by the interaction of these values ​​and debts are also explicitly adopted and preserved.

The purchased portion can be "paid for" in various ways. On the one hand, it is conceivable that the purchaser will give up his own shares for those of the target company. In this context, the share is also spoken of as the acquisition currency, since the shareholders of the target company receive shares in the acquiring company for their share in it. In addition, settlement can of course also take place in cash or against other assets.

fusion

A merger is understood as the merger of two companies. This results in an overall legal succession for the assets and liabilities .

Accounting effects of the business combination

For the illustration in the annual financial statements, it depends on which transaction-specific features the respective business combination is characterized.

Illustration of an asset deal

In the case of an asset deal , it should be noted that this usually only affects the presentation in the individual financial statements . The consolidated financial statements, however, are not affected. This is due to the fact that only individual assets and debts are acquired in such a transaction, but not the company in its entirety as a legal entity. In this respect, there are no further consolidation measures (as with an acquisition of shares). The acquired company is thus merged into the acquiring company.

Acquisition method

According to IFRS 3.4, only the acquisition method is permitted for the mapping of business combinations. The idea behind the acquisition method is that the acquirer, regardless of whether they are committed to an asset or share deal, buys the assets and liabilities of the acquired company from an economic perspective .

The purchaser recognizes the assets and liabilities acquired in the course of an asset deal in his annual financial statements at their acquisition costs . Thus, it comes as a result in continued recognition of these items at fair value ( fair value ).

Treatment of a goodwill

Under a goodwill ( goodwill ), the difference is understood regularly, resulting from the difference between the paid purchase price and fair value of the acquired assets and liabilities. Such goodwill is to be accounted for as an intangible asset in accordance with IFRS 3.32.

Treatment of a badwill

Under a badwill , the reverse case is understood, so if the price paid is less than the fair value of assets and liabilities. According to IFRS 3.56, such a process must be particularly monitored and, in the event of a renewed examination and negative difference determination, recorded as income.

Illustration of a share deal

A share deal often results in higher requirements for the accounting of the transaction. This is v. a. due to the fact that a share deal creates a parent-daughter relationship in the majority of cases. Such is then to be consolidated in the consolidated financial statements of the purchaser (= parent company - MU).

The acquired company (= subsidiary - TU) will not be dissolved. It consequently retains its independent legal personality . In the course of such a transaction, the MU has to account for a participation in the TU in its individual financial statements . They are recognized either “at cost” or in accordance with IAS 39 .

The purchase method is also to be used in the consolidated financial statements as part of capital consolidation . In addition, the usual actions required in advance of the preparation of the consolidated financial statements must be carried out:

  • Examination of the obligation to prepare consolidated financial statements. Accordingly, it must be determined whether the respective company under consideration is at the top of a group ( IFRS 10 ).
  • Determination of the group of companies that need to be consolidated ( scope of consolidation) ( IFRS 10 ).
  • Standardization of the individual financial statements in terms of balance sheet approach and balance sheet valuation ( IFRS 10 ).
  • Currency conversion (in the event that foreign TUs are to be consolidated) ( IAS 21 ).
  • Horizontal addition of the items in the annual financial statements (consolidated financial statements) ( IFRS 10 ).
  • Implementation of the consolidation measures.

The last step is often the most important, as it is about eliminating obligations of the most varied kinds within the group (among the individual TUs). A distinction can be made between capital and delivery obligations.

See also

literature

  • Wolfgang Ballwieser , u. a. (Ed.): Handbook IFRS 2011 . 7th edition. Wiley-VCH Verlag, Weinheim 2011, ISBN 978-3-527-50587-6 .
  • Rainer Buchholz: International accounting: The essential regulations according to IFRS and the new HGB - with tasks and solutions . 9th edition. Erich Schmidt Verlag, Berlin 2011, ISBN 978-3-503-13043-6 .
  • Bernhard Pellens, u. a .: International accounting: IFRS 1 to 8, IAS 1 to 41, IFRIC interpretations, draft standards. With examples, exercises and case study . 8th edition. Schäffer-Poeschel Verlag, Stuttgart 2011, ISBN 978-3-7910-2938-2 .