CCH Guide to IFRSs 3, 10, 11 and 12, IAS 27 (revised) and IAS 28 (revised)
This book will help accounting practitioners and students keep up to date with the subjects of accounting for business combinations and consolidation.
It is a guide specifically focussing on IFRSs 3, 10, 11 and 12; IAS 27 (revised) and IAS 28 (revised).
IFRS 3
The objective IFRS 3 is to specify the financial reporting by an entity when it undertakes a business combination. A business combination is the bringing together of separate entities or businesses into one reporting entity. The result of nearly all business combinations is that one entity, the acquirer, obtains control of one or more other businesses, the acquiree. If an entity obtains control of one or more other entities that are not businesses, the bringing together of those entities is not a business combination. The accounting standard IFRS 3 sets out the definitions and requirements for information to be given by entities about business combinations and their effects.
IFRS 10, 11 and 12
In May 2011, the International Accounting Standards Board (IASB) simultaneously issued six IFRSs, of which five relate to the subject of consolidation and one on fair value measurement. The five IFRSs related to consolidation are:
- IFRS 10, Consolidated Financial Statements;
- IFRS 11, Joint Arrangements;
- IFRS 12, Disclosures of Interests in Other Entities. This is a standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities.
- IAS 27(revised), Separate Financial Statements; and
- IAS 28(revised), Investments in Associates and Joint Ventures.
This 2nd Edition has incorporated the requirements of the new IFRSs. These new and revised IFRSs bring about significant changes to some current practice. The consolidation techniques used currently will need to be modified to suit these changes.
The adoption of IFRS 10 and IFRS 11 may lead to significant changes in an entity’s reported financial position and performance. For some companies, the new definition of control will lead to consolidation of entities that were not previously included in the group, potentially resulting in more assets and liabilities on the books. There may also be instances in which companies will have to de-consolidate entities that were previously consolidated, that is, taking those entities off the balance sheet, although this is expected to be rare.
Similarly, some joint arrangements that are accounted for using proportionate consolidation under current IFRS will be accounted for using the equity method under IFRS 11. This will result in recognising a single line item for the investment and the reporting entity’s share of the joint arrangement’s profit or loss.
Conversely, there might be some joint arrangements that are currently accounted for using the equity method that will be considered joint operations under the new standard. For those arrangements, the joint operator will recognise its assets, liabilities, revenues, and expenses, and/or its share of those items, if any; that is, the single investment line item will have to be disaggregated into its components on the balance sheet and income statement.
A common feature of both IFRS 10 and IFRS 11 is that they require considerably more judgement than was required under the previous standards, and they remove some of the existing bright lines.
Key Benefits:
- Executive staff charged with planning acquisitions or that oversees acquisition activity will understand the impact of the IFRSs in areas such as deal structures, financial reporting and investor/analyst communications, and ultimately be able to prepare and present impressive and irreproachable reports to the company’s management and shareholders.
- Helps dealmakers and preparers of financial statements communicate the consequences of a business combination on the current year’s financial statements and how a business combination may affect the future years’ earnings.
- This book will enable readers to interpret the requirements of the financial reporting standards more accurately and ultimately achieve a proper level of compliance to specific facts and circumstances through illustrations and case study.
- Besides compliance with financial reporting standards, this book will also help you find the strategy that best suits your company or client.
Key Features:
- This is a book written in simple English and in a concise manner. It explains in an easy to understand manner the various forms and processes of business combinations and provide practical guide on the accounting treatment for the transactions.
- Explains the requirements of the IFRSs in a comprehensive yet easy to understand manner, replete with illustrations and case studies covering the commonly faced circumstances.
- An issue-based book that focuses on the application aspects of the requirements of the IFRSs.
- This book is not only applicable to the MY and SGP markets but also markets all over the world since the accounting standards have been “internationalised” (i.e. it is an IFRS).
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The author Prof Tan Liong Tong is a renowned author. See last page for author’s write-up.
