IFRS 3 Business Combinations outlines the accounting when an acquirer obtains control of a business (e.g. an acquisition or merger). The objective of this IFRS is to improve the relevance, reliability, and comparability of the information that a reporting entity provides in its financial statements about a business combination and its effects. To accomplish that, this IFRS establishes principles and requirements for how the acquirer:
(a) Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquire.
(b) Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and
(c) Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
Both IFRS 10 Consolidated Financial Statement and IFRS 3 Business Combination deal with business combination and financial statements. But while IFRS 10 defines control and prescribes specific consolidation procedures, IFRS 3 is more about the measurements of the items in the consolidated financial statement, such as goodwill, non-controlling interest, etc. If the entities need to deal with the consolidation, both standards should be applied.
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