IFRS 22 business combinations. New IFRS: application features

IFRS 3 “Business Combinations”, which came into force on April 1, 2004 to replace IFRS 22 “Business Combinations,” is devoted to the problems of business combinations.

Business combination represents the combination of separate entities conducting business into one reporting entity. The concept of “business combination” includes those transactions as a result of which one legal entity acquires another legal entity, as well as those transactions as a result of which a consolidated group is created, including a parent and subsidiary company.

It should be noted that this standard only deals with transactions where companies carrying on a business combine. A business is a set of operations and assets that is conducted and managed for the purpose of providing income to investors or reducing costs

or other economic benefits to participants in proportion to their share in the business. The transferred complex of operations and assets is V business when there is such an indicator as goodwill (business reputation).

Method of accounting for business combinations. In accordance with IFRS 3, all business combinations are accounted for using the acquisition method, i.e. For any business combination, a buyer must be identified. The buyer is one of the companies participating in the merger, which gains control over other companies (businesses).

Control - this is the ability to manage the financial and operating policies of the company in such a way as to obtain benefits from its activities. One company is considered to have gained control over another company when it acquires more than half of the latter's voting shares (unless there are reasonable grounds for believing that such voting share would not enable it to exercise control). However, control can be obtained when less than half of the voting shares are acquired. Examples of such situations:

The right to manage the financial and operating policies of the company, which is stipulated by the charter or agreement;

The right to appoint or dismiss a majority of members of the board of directors or other governing body of the company;

As a rule, the buyer is one of the combining companies that:

Has a high fair value;

Transfers cash and other assets in exchange for a share in the capital of another company;

As a result of the merger, it acquires the right to determine the composition of the management bodies of another company.

The requirements of IFRS 3 listed below regarding the application of the acquisition and disclosure method apply to summary (consolidated) statements. When a parent acquires a subsidiary, the parent accounts for the acquisition at historical cost in its separate financial statements. According to the requirements of IFRS 3, the acquisition method assumes:

Estimating the costs of a business combination;

Identification and measurement of the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired business;

Determination of goodwill and minority interest.

Estimating the costs of a business combination. The purchasing company's costs include:

1) funds paid to the seller of the business;

2) fair values ​​at the exchange date:

Transferred non-monetary assets;

Accepted or fulfilled obligations;

Equity instruments issued by the buyer;

3) costs directly related to the business combination (expenses for legal and consulting services, etc.).

Costs directly attributable to a business combination are costs that would not have been incurred but for the business combination, for example:

Commission;

Consultant fees;

Filing fees and charges paid directly in connection with a business combination.

Business combination costs do not include:

a) general administrative expenses;

b) costs of issuing equity instruments and financial liabilities in connection with a business combination;

c) other expenses not directly related to the business combination transaction.

IFRS 3 provides guidance on determining the fair value of identifiable assets, liabilities and contingent liabilities to ensure consistency in how companies report business combinations. The fair value of assets transferred, liabilities assumed and equity instruments transferred is measured at the exchange date.

Exchange date is the date on which each individual investment in the acquired business is recognized in the acquirer's financial statements. If the acquisition of a business occurs through several separate transactions, then there will also be several exchange dates, and therefore the fair value of the transferred non-cash assets and/or equity instruments of the acquiring company will also be determined at several exchange dates.

At the same time, in the buyer's reporting, the recognition of assets, liabilities and contingent liabilities of the acquired business will be carried out on the date of acquisition, i.e. on the date on which the acquirer obtains control of the acquired business. The date of exchange and the date of acquisition are the same if the acquisition is made through a single transaction. If the acquisition is made through several separate transactions, then there will be several exchange dates, but there will be one acquisition date. In this case, the amount of costs for a business combination is calculated as the sum of costs for individual transactions.

Example. Company A acquired common shares of Company B: October 1, 2006 - 15% of the shares for $60 million; November 26, 2006 - 10% shares for $50 million;

August 29, 2007 - 35% shares for $100 million + 5,000 treasury shares with a par value of $1,500 at a market price of $2,000 per share.

Solution. Exchange Dates: October 1, 2006, November 26, 2006, August 29, 2007 Acquisition Date: August 29, 2007

Amount of costs: 60 million + 50 million + 100 million + 10 million (5,000 shares at $2,000) = $220 million.

Identification and measurement of fair value. To reflect the assets and liabilities of the acquired business in the consolidated company's financial statements, they must be identified, tested for compliance with the recognition criteria in accordance with the IFRS concept, and measured at fair value. Identifiable (i.e., separable from the total cost of the acquired business) assets and liabilities must meet the following recognition criteria;

High probability of receipt (disposal) of economic benefits in connection with this asset (liability);

The ability to reliably evaluate a given asset (liability).

The exception is for intangible assets and contingent liabilities of an acquired business, which are sufficient for recognition that their fair value can be measured reliably. A high probability of receipt (disposal) of economic benefits in connection with this intangible asset (contingent liability) is not a necessary condition for their recognition. Therefore, in a business combination, the acquiring company may recognize those items of the acquired company that were not previously recognized on the balance sheet of the acquired company.

The fair value of contingent liabilities is measured at the amount that would be paid to a third party to transfer the liabilities.

The fair value of intangible assets is estimated based on their market price, on the basis of published or otherwise known transaction prices for similar assets, or using valuation techniques, including discounted expected cash flows from the asset and the average market return of the asset.

In the financial statements, all identifiable assets, liabilities and contingent liabilities recognized acquired are measured and stated at fair value (except for non-current assets classified as held for sale in accordance with IFRS 5, which are measured at fair value less costs to sell).

Fair value is measured by type of asset and liability as follows:

1) financial instruments - at the current market price, based on estimated values ​​based on the instruments’ profitability indicators;

2) stocks:

Finished products and goods - at selling prices less selling costs and a reasonable profit margin,

Work in progress - at sales prices less costs of production, sales and a reasonable profit margin;

3) land and structures - at market price (determined, as a rule, by an independent appraiser);

4) equipment and machinery - at a market price (determined, as a rule, by an independent appraiser), at fair value, calculated using a method based on income or depreciation cost of compensation (replacement cost);

5) net assets or liabilities under the pension plan - at the present value of the liabilities under the plan less the fair value of the plan assets;

6) accounts receivable and other similar assets - at the present value of amounts receivable minus reserves for

possible non-payments and costs of receiving payments (short-term debt is not discounted);

7) accounts payable - at the present value of amounts payable (short-term debt is not discounted);

8) tax assets and liabilities - at the undiscounted amount of tax assets and liabilities, estimated according to the data of the merged company based on the fair value of the acquired assets and liabilities.

Determination of goodwill and minority interest. Under IFRS 3, goodwill represents future economic benefits that arise from assets and cannot be identified and recognized separately from other assets or groups of assets. Goodwill is recognized as an asset and initially measured at cost, which is the excess of the costs of a business combination over the acquirer's share of the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.

Goodwill arises when the acquiring company, when acquiring a business, pays for assets that can be identified and for those that cannot be separated from the business as a whole or from a group of assets, but from which the company expects to receive economic benefits in the future.

Example. Company A acquired 70% of the common shares of Company B for $2,800 million. The following is the fair value at the date of acquisition of the shares, million dollars:

Identifiable assets 4,500

Identifiable liabilities 1,200

Identifiable contingent liabilities 100

Goodwill must be determined.

1. Net identifiable assets = Identifiable assets - - Identifiable liabilities and contingent liabilities - $3,200 million (4,500-1,200-100).

2. Company A's share of identifiable net assets = $2,240 million (70x 3,200: 100).

3. Goodwill for the transaction = Business acquisition price (shares) - Company A's share of identifiable net assets - $560 million (2,800 - 2,240).

It should be noted that goodwill is determined in the case of a step-by-step business combination based on consideration of each transaction separately. In this case, firstly, information on the fair value of identifiable assets, liabilities and contingent liabilities is taken at each exchange date; second, goodwill is calculated based on the differences between acquisition costs and the acquired share of the fair value of the identifiable assets, liabilities and contingent liabilities at each exchange date.

When less than 100% of the voting capital of an entity is acquired, not the entire fair value of the identifiable assets, liabilities and contingent liabilities, but only the acquiring entity's acquired interest in them, should be used in calculating goodwill. If the acquirer's share of the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired business exceeds the cost of acquiring the business, it must:

Re-evaluate the acquiree's identifiable assets, liabilities and contingent liabilities and estimate the costs of acquiring the business (an error may have occurred in the calculations);

If, after reassessment, the difference remains (in whole or in part), immediately recognize the entire remaining excess in the profit or loss account as profit.

It should be noted that according to IFRS 3, the entire amount of the difference is immediately recognized as profit for the reporting period.

As a result of a business acquisition, a “parent company-subsidiary” relationship may arise between the acquiring company and the acquired company, when the subject of the transaction is the purchase of voting shares of the acquired company. At the same time, the legal separation of the purchasing company and the acquired company is maintained.

If less than 100% of the voting shares are acquired, the shareholders of the acquired company are divided into main (majority) shareholders, who have control over the company, and minority shareholders, who, while owning the right to part of the net assets and profits of the acquired company, do not have control over it. The item “Minority Interest” appears in the consolidated financial statements of the parent company. Minority interest is that portion of the profit or loss and net assets of a subsidiary that is attributable to an interest in the capital of that company that the parent does not own, directly or indirectly through subsidiaries.

In the combined company's consolidated balance sheet, minority interest is reported in the equity section separately from the parent company's equity.

Example. Using the data from the previous example, it is necessary to determine the minority share. Solution.

1. Company A's share of identifiable net assets is 70%.

2. The share of minority shareholders (minority share) in the capital of company B is 30% (100 - 70).

3. Minority share in the fair value of the company's identifiable net assets - RUB 960 million. (30 x 3,200: 100).

In the consolidated balance sheet of company A on the date of acquisition of the business, a minority interest equal to RUB 960 million will be reflected in capital.

Accounting for investments in subsidiaries, the procedure for determining goodwill and minority interests, and the inclusion of reporting items of subsidiaries in the reporting of the parent company are discussed in detail in IFRS 27 “Consolidated Financial Statements and Accounting for Investments in Subsidiaries.”

Disclosure of business combinations in financial statements. IFRS 3 prescribes certain rules for disclosing or reporting information related to a business combination. Typically, such information is disclosed in the notes to the financial statements.

To reflect a business combination in financial statements, two basic rules must be observed:

1) the assets, liabilities and contingent liabilities of the acquired business are always included line by line in the assets and liabilities of the acquiring company, even if, as a result of a business combination transaction, a “parent company - subsidiary” relationship arises, and the acquiring company’s share in the capital of the acquired business is less than 100%. This rule reflects the approach adopted by IFRS 3 to accounting for business combinations based on the concept of control;

2) the issued (authorized) capital of the group is always equal to the issued (authorized) capital of the purchasing company (parent company). This rule reflects the approach adopted in IFRS 3 to accounting for business combinations from the perspective of the owners of the acquiring company.

In the financial statements, the buyer discloses information

allowing the user to evaluate:

1) the nature and financial effect of the business combination that occurs during the reporting period or after the reporting date but before the financial statements are authorized for issue. To do this, the following information is disclosed:

Names and descriptions of the merged companies or businesses;

Date of purchase;

Acquired share in capital;

About issued equity instruments;

Operations that are planned to be eliminated as a result of the merger;

The amounts for all classes of assets, liabilities and contingent liabilities recognized at the acquisition date and, where possible, the carrying amounts for them before the acquisition date;

The amount of the excess of the fair value of the assets, liabilities and contingent liabilities of the acquired business recognized over the costs of the business combination and the line item in the income statement where the excess is recognised;

Factors that led to the recognition of goodwill or the excess of the fair value of the assets, liabilities and contingent liabilities of the acquired business over the costs of the business combination;

The amount of profit or loss of the acquired business from the date of acquisition included in the acquiring company's profit (loss) for the period (if it is practicable to disclose such information);

The combined entity's revenue, profit or loss for the period if the acquisition date had been at the beginning of that period (if it is practicable to disclose such information);

2) the financial effect of gains, losses, error corrections and other adjustments recognized in the reporting period that relate to the business combination;

3) changes in the carrying amount of goodwill for the period.

IFRS 22, dedicated to business combinations, has been replaced since 2004 by another standard that addresses business combinations more broadly. Let's look at what the current standard is.

Application of the new standard

IFRS 22“Business Combinations”, which came into effect in July 1999, was replaced in March 2004 by IFRS 3 “Business Combinations”, which is similar in content, which is currently used in the Russian Federation in the text version put into effect by Order of the Ministry of Finance of Russia dated December 28, 2015 No. 217n.

It must be used when preparing reports for organizations that have acquired a business or part of it. The standard provides the rules:

• recognition and measurement of those items that may be considered a business acquisition;
• recognition and measurement of goodwill or gain on acquisition;
• determining the range of issues requiring disclosure in reporting in connection with the acquisition.

A business combination is a process in which an acquirer gains control of one or more other businesses. The types of mergers are quite diverse and can occur, for example, due to:

• purchases paid for in cash or other assets;
• accepting obligations;
• increasing the share in the management company;
• merger agreement.

Nuances of accounting for business combinations

The date of acquisition of a business is the date on which control over it is obtained. The acquired business, which may consist of either assets or liabilities or a non-controlling interest, is accounted for separately from goodwill.

For information on how debts are taken into account during reorganization according to the rules of the Tax Code of the Russian Federation, read the article .

Acquisition costs consist of all expenses incurred in connection with it, but they should be clearly separated from all other transactions that took place in relations with the purchase object before the date of its acquisition.

As a result of the acquisition, the acquirer may be required to recognize assets and liabilities that were not recognized as such for the acquiree. For example, intangible assets or customer relations.

When accepting assets and liabilities for accounting, they are qualified taking into account all existing conditions (including those related to the acquisition and the accounting policies usually used in the organization) in such a way that the provisions of other IFRSs are subsequently applicable to them. Exceptions to this rule are lease and insurance contracts, which are accounted for according to their terms and conditions.

Business combinations also require the recognition of contingent liabilities if they arose prior to the acquisition and can be measured reliably. Their subsequent accounting is carried out either according to IFRS 37 or IFRS 18.

If the merger occurs on the basis of a contract (without payment of compensation), then the net assets continue to belong to their owners, and it may happen that the acquirer will have all available capital as a non-controlling interest.

Subtleties of acquisition evaluation

Assets and liabilities taken into account (including contingent ones) are measured at fair value, unless IFRS contains other valuation requirements. An exception may be non-controlling interests, which can be assessed in proportion to the net assets of the acquisition.

Income tax temporary differences and deferred tax assets and liabilities are measured under IFRS 12, employee benefit liabilities under IFRS 19 and share-based compensation liabilities under IFRS 2.

Based on the remaining validity period, the intangible asset previously provided to the future purchase object is assessed. And non-current assets that are held for sale are measured at fair value less costs to sell (IFRS 5).

Also, the consideration transferred for acquired assets and liabilities (if these are not shares) should be assessed at fair value, with the difference from revaluation as of the acquisition date reflected in profit or loss if its book value and fair value differ. The exception here would be a situation in which the consideration is transferred to the acquisition object and remains with the acquirer as part of it. There is no need to remeasure the carrying amount of such consideration to fair value.

If a company (or a share in it) is acquired in which the acquirer previously owned part of the capital, then he must revalue his initial share of participation, bringing it to fair value.

Read about how shares are valued during reorganization according to the rules of the Tax Code of the Russian Federation. .

The revaluation of the combined items may not be completed by the end of the reporting period, and then they are shown in the financial statements as a preliminary estimate. As the necessary information becomes available, the estimate is updated, and these adjustments are taken into account retrospectively in the financial statements for the relevant periods. This clarification procedure takes no more than 1 year.

Disclosure of information in reporting

The reporting should reflect:

• a description of the business combination and the reasons for it;
• the results of the mergers that took place during the reporting period, with quantitative and qualitative characteristics of all elements of the process;
• reasons for the incomplete revaluation of the combined items;
• adjustments to the estimate of the financial consequences of combinations recognized in the reporting period;
• any other reasons for changes in data in the assessment of parameters characterizing the combination, including due to depreciation, exchange rate differences.

Results

Business combinations are a rather labor-intensive process in terms of assessment and accounting, for which IFRS provides a fairly long period allowing for adjustments to its results.

International Financial Reporting Standard (IFRS) 3 Business Combinations

With changes and additions from:

1 The objective of this IFRS is to enhance the relevance, reliability and comparability of the information that a reporting entity presents in its financial statements about a business combination and its consequences. To achieve this objective, this IFRS sets out principles and requirements for how an acquirer:

(a) recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;

(b) recognizes and measures goodwill acquired in a business combination or the proceeds of a bargain acquisition; And

(c) determines what information to disclose to enable users of financial statements to evaluate the nature and financial consequences of the business combination.

Scope of application

2 This IFRS applies to a transaction or event that meets the definition of a business combination. This IFRS does not apply to:

Information about changes:

(a) the treatment of the establishment of the joint venture in the financial statements of the joint venture itself;

(b) the acquisition of an asset or group of assets that does not constitute a business. In such cases, the acquirer must identify and recognize the individually identifiable assets acquired (including those assets that meet the definition and criteria for recognition as intangible assets in IAS 38 Intangible Assets) and the liabilities assumed. The cost of the group must be allocated to individual identifiable assets and liabilities based on their relative fair values ​​at the date of purchase. Such transaction or event does not give rise to goodwill.

(c) a combination of enterprises or businesses under common control (in paragraphs B1-B4

Information about changes:

7 To identify the entity acquirer that obtains control of the acquiree, the guidance in IFRS 10 should be used. If a business combination has occurred but application of the guidance in IFRS 10 does not clearly indicate which of the combining entities is the acquirer, the factors described in paragraphs B14–B18 must be considered to determine the acquirer.

Determining the date of purchase

8 The acquirer must identify the acquisition date, which is the date on which it obtains control of the acquiree.

9 The date on which the acquirer obtains control of the acquiree is generally the date on which the acquirer legally transfers consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date. However, the buyer could take control on a date that is either earlier or later than the closing date. For example, the acquisition date is before the closing date if the written agreement provides that the acquirer obtains control of the acquiree on the day before the closing date. Buyer must consider all relevant facts and circumstances in identifying the date of purchase.

Recognition and measurement of identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree

Principle of recognition

10 At the acquisition date, the acquirer shall recognize separately from goodwill the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree. Recognition of identifiable assets acquired and liabilities assumed is subject to the satisfaction of the conditions specified in paragraphs 11 and .

Conditions of recognition

11. To satisfy the recognition conditions under the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities set out in the Financial Statements Framework at the acquisition date. For example, costs that an acquirer expects, but is not required, to incur in the future to carry out its plan to exit the acquiree's operations or terminate the employment or relocation of the acquiree's employees are not liabilities at the acquisition date. Therefore, the buyer does not recognize such costs under the acquisition method. Instead, the acquirer recognizes such costs in its post-merger financial statements in accordance with other IFRSs.

12 In addition, to satisfy the recognition conditions under the acquisition method, the identifiable assets acquired and liabilities assumed must be part of what the acquirer and the acquiree (or its former owners) exchange in a business combination, rather than the result of separate transactions. The acquirer shall apply the guidance in paragraphs 51–53 to determine which of the assets acquired or liabilities assumed are part of the exchange for the acquiree and which, if any, result from separate transactions that will be accounted for in accordance with their nature and applicable IFRS.

13 The acquirer's application of the recognition principle and conditions may result in the recognition of certain assets and liabilities that the acquiree has not previously recognized as assets and liabilities in its financial statements. For example, an acquirer recognizes acquired identifiable intangible assets, such as a brand name, a patent, or customer relationships, that the acquiree did not recognize as assets in its financial statements because it developed them in-house and expensed the related costs.

16 In some situations, IFRSs provide different accounting treatment depending on how an entity classifies or defines a particular asset or liability. Examples of classifications or designations that a purchaser would need to make based on relevant conditions that exist at the date of acquisition include, but are not limited to:

(a) the classification of specific financial assets and liabilities as measured at fair value or amortized cost in accordance with IFRS 9 Financial Instruments;

(c) assessing whether the embedded derivative should be separated from the host contract in accordance with IFRS 9 (which is a matter of “classification” as used in this IFRS).

17 This IFRS provides two exceptions to the principle in paragraph 15:

(a)classifying the lease as either an operating lease or a finance lease in accordance with IAS 17 Leases; And

(b) classifying the contract as an insurance contract in accordance with IFRS 4 Insurance Contracts.

The buyer must classify such contracts based on the contractual terms and other factors existing at the time the contract was accepted (or if the contract terms were modified in a manner that would result in a change in classification, at the time of the modification, which could be the date of acquisition).

Evaluation principle

18 The acquirer shall measure the identifiable assets acquired and liabilities assumed at their acquisition date fair values.

19 For each business combination, the acquirer shall measure, at the acquisition date, the components of the non-controlling interest in the acquiree that are direct interests and entitle their owners to a proportionate share of the net assets of the entity in the event of its liquidation, or:

(a)at fair value, or

(b) as a proportionate share of existing equity instruments to the recognized amount of the acquiree's identifiable net assets.

All other components of non-controlling interest are measured at fair value at the acquisition date, unless IFRS requires the use of a different measurement basis.

Employee benefits

26 The acquirer shall recognize and measure a liability (or asset, if any) related to employee benefits of the acquiree in accordance with IAS 19 Employee Benefits.

Compensating assets

27 In a business combination, the seller may contractually compensate the buyer for the result of a contingent fact of business or an uncertainty associated with a particular asset or liability or part thereof. For example, the seller may compensate the buyer for losses in excess of a specified amount for a liability that results from a specific contingent fact of business. In other words, the seller guarantees that the buyer's obligation will not exceed the specified amount. As a result, the buyer receives an offsetting asset. The acquirer must recognize the indemnifying asset at the same time as the indemnified item, and the measurement of such asset is made on the same basis as the measurement of the indemnified item. In this case, it is necessary to create an assessment reserve for uncollectible amounts. Therefore, if compensation relates to an asset or liability recognized at the acquisition date and measured at acquisition-date fair value, then the acquirer must recognize an acquisition-date compensating asset measured at acquisition-date fair value. For an compensating asset measured at fair value, the effects of uncertainty about future cash flows as they are collected are included in the fair value measurement and no separate valuation allowance is required (see paragraph B41 for appropriate application guidance).

28 In some circumstances, compensation may relate to an asset or liability that is an exception to the recognition or measurement principle. For example, compensation may relate to a contingent liability that is not recognized at the acquisition date because its fair value cannot be measured reliably at that date. Alternatively, compensation may relate to an asset or liability, such as that arising from employee compensation measured on a basis that is not fair value at the acquisition date. In such circumstances, the indemnifying asset must be recognized and measured using assumptions that are consistent with those used to measure the indemnified item, consistent with management's assessment of the collectability of the indemnifying asset and any contractual restrictions placed on the indemnified amount. Paragraph 57 provides guidance on the subsequent accounting for an compensating asset.

Exceptions to the valuation principle

Reacquired rights

29 An acquirer shall measure the value of a reacquired right recognized as an intangible asset based on the remaining term of the relevant contract, regardless of whether market participants would take the potential renewal of the contract into account when measuring its fair value. Paragraphs B35 and B36 provide appropriate guidance for use.

Transactions involving share-based payments

30 The acquirer shall measure the liability or equity instrument associated with the acquiree's share-based payment transactions or the replacement of the acquiree's share-based payment transactions with the acquirer's share-based payment transactions in accordance with the method set out in IFRS 2 Share-based Payment at the acquisition date. (This Standard refers to the result of this method as the “market valuation” of the share-based payment transaction.)

Assets held for sale

31 An acquirer shall measure an acquired non-current asset (or disposal group) that is classified as held for sale at the acquisition date in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations at fair value less costs to sell. in accordance with paragraphs 15-18 of the specified IFRS.

Recognition and measurement of goodwill or gain from a bargain purchase

32 The acquirer shall recognize goodwill at the acquisition date measured as the excess of (a) over (b) below:

(a) aggregate:

(i) the consideration transferred measured in accordance with this IFRS, which generally requires measurement at acquisition-date fair value (see paragraph 37);

(ii) the amount of any non-controlling interest in the acquiree measured in accordance with this IFRS; And

(iii) in a business combination achieved in stages (see paragraphs 41 and ), the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree.

(b) the amount at the acquisition date of the identifiable assets acquired less liabilities assumed, measured in accordance with this IFRS 3.

33 In a business combination in which the acquirer and the acquiree (or its former owners) exchange only non-controlling interests, the acquisition-date fair value of the acquiree's non-controlling interest can be measured more reliably than the acquisition-date fair value of the acquirer's non-controlling interest. In this case, the acquirer must determine the amount of goodwill using the acquisition-date fair value of the acquiree's non-controlling interest instead of the acquisition-date fair value of the non-controlling interest transferred. To determine the amount of goodwill in a business combination in which no consideration is transferred, the acquirer must use the acquisition-date fair value of the acquirer's non-controlling interest in the acquiree instead of the acquisition-date fair value of the consideration transferred (paragraph 32(a)(i)). Paragraphs B46 to B49 provide appropriate guidance for use.

Bargain purchases

34 From time to time, an acquirer makes a bargain purchase that is a business combination in which the amount in paragraph 32(b) exceeds the aggregate of the amounts in paragraph 32(a). If the excess continues after applying the requirements in paragraph 36, the acquirer shall recognize the resulting gain in profit or loss at the acquisition date. The income must be attributed to the buyer.

35 A bargain purchase could occur, for example, in a business combination that is a forced sale where the seller acts under duress. However, exclusions from recognition or measurement for any of the specific items discussed in paragraphs 22–31 may also result in the recognition of income (or change the amount of income recognized) on a bargain purchase.

36 Before recognizing gain on a bargain purchase, the acquirer shall reconsider whether it has correctly identified all assets acquired and all liabilities assumed and recognize any additional assets or liabilities identified in that review. The acquirer shall then consider the procedures used to measure the amounts required by this IFRS to be recognized at the acquisition date for the following items:

(a) identifiable assets acquired and liabilities assumed;

(b) non-controlling interest in the acquiree, if any;

(c) in relation to a business combination achieved in stages, the non-controlling interest previously held by the acquirer in the acquiree; And

(d) consideration transferred.

The purpose of the review is to ensure that the valuation appropriately reflects all available information at the date of acquisition.

Transferred consideration

37 The consideration transferred in a business combination shall be measured at fair value, which is calculated as the sum of the acquisition-date fair values ​​of the assets transferred by the acquirer, the liabilities assumed by the acquirer to the acquiree's former owners, and the equity interests issued by the acquirer. (However, any portion of an acquirer's share-based payment awards provided in exchange for awards held by employees of the acquiree that is included in the consideration transferred in a business combination will be measured in accordance with paragraph 30 rather than at fair value ). Examples of possible forms of consideration include cash, other assets, the buyer's business or subsidiary, contingent consideration, common or preferred equity instruments, options, warrants and mutual venture interests.

38 The consideration transferred may include assets or liabilities of the acquirer whose carrying amounts differ from their fair values ​​at the acquisition date (for example, non-monetary assets or the acquirer's business). In such a case, the acquirer must remeasure the transferred assets or liabilities to their fair value at the acquisition date and recognize the resulting gain or loss, if any, in profit or loss. However, sometimes the transferred assets or liabilities remain in the combined entity after the business combination (for example, because the assets or liabilities were transferred to the acquiree rather than to its former owners), and the acquirer therefore retains control over them. In that situation, the acquirer must measure such asset and liability at their carrying amounts immediately before the acquisition date and must not recognize gain or loss in profit or loss on assets or liabilities that it controls, either before or after the business combination.

Conditional compensation

39 The consideration that the acquirer gives in exchange for the acquiree includes any assets or liabilities arising as a result of the contingent consideration arrangement (see paragraph 37). The acquirer must recognize the fair value of the contingent consideration at the acquisition date as part of the consideration transferred in exchange for the acquiree.

Information about changes:

40 An acquirer shall classify an obligation to pay contingent consideration that meets the definition of a financial instrument as a financial liability or as equity, based on the definitions of an equity instrument and a financial liability in paragraph 11 of IAS 32 Financial Instruments: Presentation. The buyer must classify the right to return previously transferred consideration, subject to certain conditions, as an asset. Paragraph 58 provides guidance on the subsequent accounting for contingent consideration.

Additional Guidance on Applying the Acquisition Method to Specific Types of Business Combinations

Business combination carried out in stages

41 In some cases, the acquirer obtains control of an acquiree in which it held an equity interest immediately before the acquisition date. For example, at 31 December 20X1 Entity A owns a 35% non-controlling interest in Entity B. On that date, Entity A acquires an additional 40% non-controlling interest in Entity B, which gives it control of Entity B. This IFRS refers to A transaction such as a business combination carried out in stages is sometimes also referred to as a staged acquisition.

Information about changes:

42 In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree to its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss or other total income, as applicable. In prior reporting periods, the acquirer may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. In such a case, the amount that was recognized in other comprehensive income should be recognized on the same basis that would be required if the acquirer had directly disposed of the equity interest it previously owned.

Business combination without transfer of consideration

43 In some cases, the acquirer obtains control of the acquiree without transferring consideration. The acquisition method used to account for a business combination applies to that combination. Among such circumstances are the following:

(a) The acquiree acquires back enough of its own shares so that the existing investor (acquirer) obtains control.

(b) The minority veto power that previously restrained the acquirer from controlling an acquiree in which the acquirer holds a majority of voting rights has expired.

(c) The buyer and the acquiree agree to combine their businesses by contract only. The acquirer does not transfer any consideration in exchange for control of the acquiree and has no equity interest in the acquiree on or before the acquisition date. An example of a business combination carried out solely by contract would be the combination of two firms under a “sealing” agreement or the formation of a dual-listed corporation.

44 In a combination effected by contract only, the acquirer shall attribute to the owners of the acquiree the amount of the acquiree's net assets recognized in accordance with this IFRS. In other words, equity interests in the acquiree that are not held by the acquirer are reported as non-controlling interest in the acquirer's financial statements after the combination, even if this results in all of the acquiree's equity interests being allocated to non-controlling interest.

Evaluation period

45 If the initial accounting for a business combination is not completed by the end of the reporting period in which the combination occurs, the acquirer shall record in its financial statements provisional amounts for those items for which the accounting is not completed. During the measurement period, the acquirer must make a retrospective adjustment to the contingent amounts recognized at the acquisition date to reflect new information learned about facts and circumstances that existed at the acquisition date that, if then known, would have affected the measurement of the amounts recognized at that date. During the measurement period, the acquirer must also recognize additional assets or liabilities if new information becomes available about facts and circumstances that existed at the acquisition date that, if then known, would have resulted in the recognition of such assets and liabilities at that date. The evaluation period ends once the buyer obtains the information he sought about the facts and circumstances existing at the date of acquisition or learns that there is no more information available. However, the assessment period should not exceed one year from the date of acquisition.

46 The measurement period is the period after the acquisition date during which the acquirer may adjust the contingent amounts recognized in respect of the business combination. The measurement period provides the acquirer with a reasonable time to obtain the information necessary to identify and measure at the acquisition date in accordance with the requirements of this IFRS:

(a) the identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;

(b) the consideration transferred to the acquiree (or other amount used in measuring goodwill);

(c) in a business combination achieved in stages, the equity interest of the acquiree previously held by the acquirer; And

(d) resulting from goodwill or gain from a bargain purchase.

47 The acquirer shall consider all relevant factors in determining whether information obtained after the acquisition date should result in an adjustment to contingent amounts recognized or whether the information results from events that occurred after the acquisition date. Relevant factors include the date on which the additional information was received and whether the buyer can determine the reason for the change in the contingent amounts. Information that is obtained shortly after the acquisition date is more likely to reflect circumstances that existed at the acquisition date than information obtained several months later. For example, the sale of an asset to a third party shortly after the acquisition date for an amount that differs significantly from its deemed fair value measured at that date would likely indicate an error in the deemed amount unless the event that caused the change in the asset's fair value could be installed.

48 The acquirer recognizes an increase (decrease) in the provisional amount recognized in respect of an identifiable asset (liability) by decreasing (increasing) goodwill. However, new information obtained during the measurement period may, in some cases, result in an adjustment to the notional amount of more than one asset or liability. For example, the buyer could agree to pay for losses associated with an accident at one of the acquiree's plants that are covered in whole or in part by the acquiree's liability insurance policy. If the acquirer obtains new information during the measurement period about the acquisition-date fair value of such a liability, the adjustment to goodwill resulting from a change in the provisional amount recognized for the liability would be offset (in whole or in part) by a corresponding adjustment to goodwill resulting from the change in the provisional amount. recognized in relation to a claim receivable from the insurer.

49 During the measurement period, the acquirer shall recognize adjustments to contingent amounts as if accounting for the business combination had been completed at the acquisition date. Accordingly, the acquirer should revise historical comparative information presented in the financial statements as appropriate, including changes to any impairment, amortization or other income-related items recognized at the conclusion of initial accounting.

50 After the end of the measurement period, the acquirer shall restate the accounting for a business combination only to correct errors in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Determining what is part of a business combination

51 There may be a relationship or understanding between the acquirer and the acquiree that predates the commencement of negotiations for the business combination, or the acquirer and the acquiree may enter into an agreement during negotiations that is a separate transaction from the business combination. In both situations, the acquirer must identify all amounts that are not part of what the acquirer and the acquiree (or its former owners) exchange in the business combination, that is, amounts that are not part of the exchange for the acquiree. Under the acquisition method, the acquirer must recognize only the consideration transferred for the acquiree and the assets acquired and liabilities assumed in exchange for the acquiree. Accounting for individual transactions must be carried out in accordance with the relevant IFRS.

52 A transaction entered into by or on behalf of the acquirer, or primarily for the benefit of the acquirer or the combined entity, rather than primarily for the benefit of the acquiree (or its former owners) before the combination, is likely to be a separate transaction. The following are examples of specific transactions that should not be subject to the acquisition method:

(a) a transaction that results in the establishment of a pre-combination relationship between the acquirer and the acquiree;

(b) a transaction in which the employees or former owners of the acquiree receive compensation for future services; And

(c) a transaction in which the acquiree or its former owners are reimbursed for paying the buyer's acquisition expenses.

53 Acquisition costs are the costs incurred by the acquirer in consummating a business combination. Such costs include intermediary fees; payment for advisory, legal, accounting, valuation, and other professional or consulting services; general administrative costs, including the cost of maintaining an internal acquisitions department; and costs of registration and issuance of debt and equity securities. The buyer must account for acquisition costs as expenses in the periods in which the costs are incurred and the services received, with one exception. The costs of issuing debt or equity securities must be recognized in accordance with IAS 32 and IFRS 9.

Subsequent assessment and accounting

54 In general, the acquirer shall subsequently measure and account for the assets acquired, liabilities assumed or incurred and equity instruments issued in a business combination in accordance with other applicable IFRSs, depending on their nature. However, this IFRS provides guidance on the subsequent measurement and accounting for the following assets acquired, liabilities assumed, and equity instruments issued in a business combination:

(a) reacquired rights;

(b) contingent liabilities recognized at the acquisition date;

(c) compensating assets; And

Reacquired rights

55 A reacquired right that is recognized as an intangible asset is amortized over the remaining contractual period of the contract under which the right was granted. A buyer who subsequently sells the reacquired right to a third party must take into account the carrying amount of the intangible asset in determining the gain or loss on the sale.

Contingent liabilities

Information about changes:

56 After initial recognition and until the liability is settled, canceled or expired, the acquirer shall measure the contingent liability recognized in a business combination at the higher of:

(b)the amount initially recognized less, where appropriate, accumulated amortization recognized in accordance with IAS 18 Revenue.

This requirement does not apply to contracts accounted for in accordance with IFRS 9.

Compensating assets

57 At the end of each subsequent reporting period, the acquirer shall measure the compensating asset that was recognized at the acquisition date on the same basis as the liability or asset being compensated, in accordance with any contractual limitations on its amount, and for the compensating asset that subsequently not measured at fair value, subject to management's assessment of the collectability of the compensating asset. The buyer must derecognise the compensating asset only when the asset is repossessed, sold, or the buyer otherwise loses title to it.

Conditional compensation

Information about changes:

58 Some changes in the fair value of contingent consideration that an acquirer recognizes after the acquisition date may result from additional information that the acquirer obtains after that date about the facts and circumstances that existed at the acquisition date. Such changes are adjustments to the measurement period in accordance with paragraphs 45 to 49 . However, changes resulting from events occurring after the acquisition date, such as achieving revenue targets, achieving a specified stock price, or achieving a milestone in a research and development project, are not measurement period adjustments. The acquirer shall account for changes in the fair value of the contingent consideration that are not measurement period adjustments as follows:

(a) Contingent consideration classified as equity shall not be remeasured and its subsequent settlement shall continue to be accounted for in equity.

Information about changes:

(b) Contingent consideration classified as an asset or liability that:

(i) is a financial instrument and is within the scope of IFRS 9, shall be measured at fair value and the resulting gain or loss shall be recognized either in profit or loss for the period or in other comprehensive income, in accordance with with IFRS 9.

Information disclosure

59 An acquirer shall disclose information that enables users of its financial statements to evaluate the nature and financial consequences of the business combination, either:

(a) during the current reporting period; or

(b)after the end of the reporting period but before the financial statements are authorized for issue.

61 An acquirer shall disclose information that enables users of its financial statements to evaluate the financial consequences of adjustments recognized during the current reporting period that are attributable to business combinations in the current period or prior reporting periods.

63 If ​​certain disclosures required by this and other IFRSs do not achieve the objectives in paragraphs 59 and , the acquirer shall disclose any additional information necessary to achieve those objectives.

Effective date and transition to the new accounting procedure

Effective date

64 This IFRS shall be applied prospectively to a business combination for which the acquisition date is on or after the first annual reporting period beginning on or after 1 July 2009. Early use is permitted. However, this IFRS shall be applied only at the beginning of an annual reporting period that begins on or after 30 June 2007. If an entity applies this IFRS before 1 July 2009, it must disclose that fact and at the same time apply

Business combination A transaction or other event in which an acquirer gains control of one or more businesses. Operations are sometimes referred to as "real mergers" or "mergers of equals" are also business combination in the sense that the term is used in this IFRS. buyer The enterprise that obtains control of acquired enterprise. acquired Business or businesses over which control is acquired the enterprise is the buyer in a business combination. fair This is the price that would be received upon sale cost of an asset or paid when transferring a liability when performing an operation on a voluntary basis between market participants at the valuation date (see IFRS 13).

(as amended by IFRS 13

(see text in previous editors)

Appendix B

DEFINITION OF TERMS

This appendix forms an integral part of this IFRS.

Business combinations involving entities under common control (application paragraph 2(c)

B1. This IFRS does not apply to business combinations involving entities or businesses under common control. A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not is temporary.

B2. A group of individuals should be considered to control an enterprise if, by contract, they have the collective right to determine its financial and operating policies so as to obtain benefits from the activities of the enterprise. Therefore, a business combination is not within the scope of this IFRS if the same group of individuals has the ultimate contractual collective right to determine the financial and operating policies of each of the combining entities so as to obtain benefits from their activities. and this right is not temporary.

B 3 . An entity may be controlled by an individual or group of individuals acting together under a contract, and that individual or group of individuals may not be subject to financial reporting requirements underInternationalstandardsfinancialreporting (IFRS). Therefore, the combining entities do not need to be included in the same consolidated financial statements of the business combination to be treated as a business combination involving entities under common control.

B4. The amount of non-controlling interests in each of the combining entities before and after the business combination is not relevant in determining whether the business combination includes entities under common control. Similarly, the fact that one of the combining entities is a subsidiary that is excluded from the group's consolidated financial statements is not relevant in determining whether the business combination includes entities under common control.

Definition of a business combination (application point 3)

B5. This IFRS defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses. The acquirer could obtain control of the acquired entity in a variety of ways, for example:

(a) by transfer of cash, cash equivalents or other assets (including the net assets that constitute the business);

(b) by accepting obligations;

(c) by issuing equity interests;

(d) by providing more than one type of consideration; or

(e) without transfer of consideration, including consolidation by contract only (see Art. paragraph 43).

B6. A business combination may be structured in a variety of ways for legal, tax or other reasons, which include, but are not limited to, the following situations:

(a) one or more businesses become subsidiaries of the buyer, or the net assets of one or more businesses are merged into the buyer;

(b) one merging entity transfers its net assets or its owners transfer their interests to the other entity or its owners;

(c) all of the merging entities transfer their net assets or the owners of such entities transfer their interests to the newly formed entity (such transactions are sometimes referred to as merger or compilation transactions); or

(d) a group of former owners of one of the merging entities obtains control of the combined entity.

Business definition (application point 3)

B7. A business consists of inputs and the processes applied to those inputs that have the potential to create returns. Although a business typically produces returns, returns are not required to qualify an integrated entity as a business. Below is a definition of the three elements of business:

(a) Input: Any economic resource that creates or has the potential to create an output from the application of one or more processes. Examples include long-lived assets (including intangible assets or rights to use long-lived assets), intellectual property, the ability to access needed materials or rights, and employees.

(b) Process: Any system, standard, protocol, agreement or rule that, when applied to an input or contributions, creates or is likely to create an output. Examples include strategic management processes, operational processes, and resource management processes. These processes are typically documented, but an organized workforce with the necessary skills and experience and compliance with regulations and agreements can provide the necessary processes that can be applied to inputs to create impact. (Accounting, billing, payroll, and other administrative systems are generally not processes that are used to create output.)

(c) Return: the result of contributions and the processes applied to such contributions that provide or are capable of providing income in the form of dividends, cost reductions or other economic benefits directly to investors or other owners, members or participants.

B8. In order for a collection of activities and assets to operate and be managed to achieve specified objectives, the collection requires two essential elements - inputs and the processes applied to those inputs that are or will be used together to create output. However, a business need not include all of the inputs or processes that the seller used to conduct that business if market participants are able to acquire the business and continue to produce outputs, for example, by integrating the business with their own inputs and processes.

B9. The nature of the business elements varies depending on the industry and the structure of the enterprise's operations (activities), including the stage of formation of the enterprise. An existing business often has many different types of inputs, processes and outputs, while a new business often has a small number of inputs and processes, and sometimes only a single type of output (product). Almost all businesses also have obligations, but a business does not necessarily have obligations.

B10. An integrated set of activities and assets that is in its infancy may not produce returns. If there is no return, the buyer must consider other factors to determine whether the entity is a business. Such factors include, but are not limited to:

(a) whether the entity has commenced its main planned activities;

(b) whether the employee population has intellectual property and other contributions and processes that could be applied to those contributions;

(c) whether the population is following a plan to produce output; And

(d) whether the population will be able to access customers who will purchase the output.

Not all of these factors need to be present in a particular integrated set of activities and assets at an emerging stage for the set to be classified as a business.

B11. The determination of whether a particular set of assets and activities constitutes a business must be based on whether the market participant can carry out those integrated activities and operate the assets as a business. Thus, in assessing whether a particular collection is a business, it does not matter whether the seller operated the collection as a business or whether the buyer intends to operate the collection as a business.

B12. In the absence of evidence to the contrary, the particular set of assets and activities in which goodwill is present should be treated as a business. However, a business does not necessarily have to have goodwill.

Definition of buyer (application points 6 and 7)

B13. The guidance provided in IFRS 10 "Consolidated financial statements" must be used to identify the acquirer - the entity that obtains control of the acquiree. If a business combination is consummated, but the application of the guidance provided in IFRS 10 , does not clearly indicate which of the merging entities is the acquirer, the factors described in points B14 - B18 , with this definition.

(as amended by IFRS 10 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

(see text in previous editors)

B14. In a business combination achieved primarily by the transfer of cash or other assets or the assumption of liabilities, the acquirer is generally the entity that transfers the cash or other assets or assumes the liabilities.

B15. In a business combination that is accomplished primarily through an exchange of interests, the buyer is typically the entity that issues the interests. However, in some business combinations, commonly referred to as “reverse acquisitions,” the issuing entity is the acquired entity. IN points B19 - B27 provides guidance on accounting for reverse acquisitions. Other relevant facts and circumstances must also be considered to identify the acquirer in a business combination achieved by exchange of interests, including:

(a) relative voting rights in the combined entity after a business combination - Generally, the acquirer is the combining entity whose owners, as a group, retain or receive the majority of the voting rights in the combined entity. In determining which group of owners retains or receives the majority of voting rights, an entity must consider the existence of any unusual or special arrangements with respect to voting rights and options, warrants or convertible securities.

(b) the existence of a significant minority voting interest in the combined entity if no other owner or organized group of owners has a significant voting interest - Generally, the acquirer is the combining entity whose sole owner or organized group of owners holds the largest minority voting interest in merged enterprise.

(c) composition of the management body of the combined entity - Typically, the acquirer is the merging entity, the owners of which have the ability to select or appoint or remove a majority of the members of the management body of the combined entity.

(d) composition of the combined entity's senior management - Typically, the acquirer is the combining entity (former) whose management dominates the management of the combined entity.

(e) terms of exchange of interests - Typically, the acquirer is the combining entity that pays a premium in excess of the fair value of the interests before the combination of the other combining entity or entities.

B16. Typically, the acquirer is a merging entity whose relative size (measured, for example, in assets, revenues or profits) is significantly greater than the size of the other merging entity or entities.

B17. In a business combination involving more than two entities, the determination of the buyer should include consideration of, among other things, which of the combining entities initiated the combination and the relative size of the combining entities.

B18. The new entity formed for the purpose of effecting a business combination is not necessarily the acquirer. If a new entity is formed for the purpose of issuing equity interests to effect a business combination, one of the combining entities that existed prior to the business combination must be identified as the acquirer in accordance with the guidance provided in points B13 - B17 . In contrast, a new entity that transfers cash or other assets or accepts liabilities as consideration may be an acquirer.

Reverse acquisitions

B19. A reverse acquisition occurs when the entity issuing the securities (the legal acquirer) is identified for accounting purposes as the acquiree based on the guidance provided in points B13 - B18 . The entity in which the equity interests are acquired (the acquiree in legal terms) must, for accounting purposes, be the acquirer in respect of the transaction that is treated as a reverse acquisition. For example, reverse acquisitions sometimes occur when a private operating entity wants to become a public entity but does not want to register its equity instruments. To achieve its goal, a private enterprise arranges for a public enterprise to acquire shares in its capital in exchange for shares in the capital of the public enterprise. In this example, the public entity is the acquirer in legal terms because it has issued its equity interests, and the private entity is the acquiree in legal terms because its equity interests have been acquired. However, application of the guidance set out in points B13 - B18 , leads to identification:

(a) a public enterprise as an accounting acquiree (accounting acquiree); And

(b) a private enterprise as an accounting purchaser (accounting purchaser).

The entity acquired, for accounting purposes, must meet the definition of a business in respect of the transaction to be accounted for as a reverse acquisition, and all the recognition and measurement principles in this IFRS apply, including the requirement to recognize goodwill.

Valuation of transferred consideration

B20. In a reverse acquisition, the acquirer generally does not issue any consideration to the acquiree for accounting purposes. Instead, the entity being acquired for accounting purposes typically issues shares of its capital to the acquirer's owners for accounting purposes. Accordingly, the acquisition-date fair value of the consideration transferred by the acquirer for accounting purposes for its interest in the acquiree for accounting purposes is based on the number of equity interests that the legal subsidiary would have to issue to provide to the owners of the parent. from a legal point of view, the enterprise has the same percentage share in the capital of the combined enterprise that is obtained as a result of the reverse acquisition. The fair value of the equity interest calculated in this way can be used as the fair value of the consideration given in exchange for the acquiree.

Preparation and presentation of consolidated financial statements

B21. The consolidated financial statements subsequent to a reverse acquisition must be issued under the name of the legal parent (the accounting acquiree), but described in the notes as a continuation of the financial statements of the legal subsidiary (the acquirer). accounting purposes) with only one adjustment, which is a retrospective adjustment of the legal capital of the acquirer for accounting purposes to reflect the legal capital of the entity acquired for accounting purposes. This adjustment is required to reflect the legal capital of the legal parent enterprise (the acquired enterprise, for accounting purposes). The comparative information presented in these consolidated financial statements is also adjusted on a retrospective basis to reflect the legal capital of the legal parent (accounting acquiree).

B22. Since these consolidated financial statements represent a continuation of the financial statements of the legal subsidiary except for its capital structure, the consolidated financial statements reflect:

(a) the assets and liabilities of the legal subsidiary (the acquirer for accounting purposes) recognized and measured at their pre-combination carrying amounts;

(b) the assets and liabilities of the legal subsidiary (accounting acquirer) recognized and measured in accordance with this IFRS;

(c) the balance of retained earnings and other equity items of the legal subsidiary (acquirer for accounting purposes) prior to the business combination;

(d) the amount recognized as equity instruments issued in those consolidated financial statements shall be determined by adding the issued equity instruments of the legal subsidiary (accounting acquirer) outstanding immediately before the business combination to the fair value parent, from a legal point of view, enterprise (acquired, for accounting purposes, enterprise). However, the capital structure in such consolidated financial statements (that is, the number and type of equity instruments issued) must reflect the capital structure of the parent entity (the entity acquired for accounting purposes), including the equity instruments issued by it to effect the combination. Accordingly, the capital structure of the legal subsidiary (the accounting acquirer) is restated using the exchange ratio specified in the acquisition agreement to reflect the number of equity instruments of the legal parent (the accounting acquiree). enterprises) issued upon reverse acquisition.

(as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

(see text in previous editors)

(e) the non-controlling interest's proportionate share of retained earnings and other equity instruments of the legal subsidiary (accounting acquirer) at their pre-combination carrying amount, as discussed in paragraphs B23 and B24.

Non-controlling interest

B23. Sometimes in reverse acquisition cases, some owners of the legal subsidiary (accounting acquirer) do not exchange equity instruments in it for equity instruments in the legal parent (accounting acquiree). Such owners are treated as non-controlling interests in the consolidated financial statements prepared after the reverse acquisition. This is due to the fact that the owners of the legally acquired enterprise, who do not participate in the exchange of their equity instruments for the equity instruments of the buyer, legally have a share only in the results and net assets of the legally acquired enterprise , and not in the results and net assets of the combined entity. Conversely, even though the acquirer is legally treated as the acquiree for accounting purposes, the acquirer's owners legally have an interest in the results and net assets of the combined entity.

B24. Since the assets and liabilities of the legally acquired entity are recognized and measured in the consolidated financial statements at their pre-merger carrying amounts (see paragraph B22(a) ), then the non-controlling interest in a reverse acquisition must reflect the non-controlling interest of the shareholders' proportionate interest in the carrying amount of the net assets of the legal acquiree before the combination, even if the non-controlling interest in other acquisitions is measured at fair value at the acquisition date.

Earnings per share

B25. As stated in paragraph B22(d) , the capital structure presented in the consolidated financial statements prepared after a reverse acquisition reflects the capital structure of the legal acquirer (the acquiree for accounting purposes), including the equity instruments issued by such acquirer to consummate the business combination.

B26. For the purpose of calculating the weighted average number of ordinary shares outstanding (the denominator in calculating earnings per share) during the period in which the reverse acquisition occurred:

(a) the number of ordinary shares outstanding from the beginning of the period to the date of acquisition is calculated based on the weighted average number of ordinary shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange coefficient established in the merger agreement; And

(b) the number of ordinary shares outstanding from the date of acquisition to the end of that period must correspond to the actual number of ordinary shares of the acquirer (acquired for accounting purposes) outstanding during that period.

B27. Basic earnings per share disclosed for each comparative period prior to the acquisition date that is presented in the consolidated financial statements prepared after the reverse acquisition shall be calculated by dividing

(a) the profit or loss of the legal entity acquired attributable to holders of ordinary shares in each of those periods, at

(b) the weighted average historical number of shares of the legally acquired enterprise's common stock outstanding, multiplied by the exchange ratio specified in the acquisition agreement.

Recognition of specific assets acquired and liabilities assumed (application points 10 - 13)

Operating lease

B28. An acquirer shall not recognize assets or liabilities associated with an operating lease in which the acquiree is a lessee except as required by paragraphs B29 and B30.

B29. The acquirer must determine whether the terms of each operating lease in which the acquiree is a lessee are favorable or unfavorable. The acquirer must recognize an intangible asset if the terms of the operating lease are favorable relative to market conditions, and a liability if the terms are unfavorable relative to market conditions. IN paragraph B42 provides guidance on estimating the acquisition date fair value of assets under operating leases under which the acquiree is the lessor.

B30. An identifiable intangible asset may be associated with an operating lease, which can be demonstrated by the willingness of market participants to pay the price for the lease, even if it is on arm's length terms. For example, leasing an airport strip or a retail location in a high-traffic area of ​​a store could provide market entry or other future economic benefits that qualify as identifiable intangible assets, such as customer relationships. In this situation, the buyer must recognize the relevant identifiable intangible asset(s) in accordance with paragraph B31.

Intangible assets

B31. The acquirer must recognize, separately from goodwill, the identifiable intangible assets acquired in the business combination. An intangible asset is identifiable if it satisfies either the separability test or the contractual-legal test.

B32. An intangible asset that meets the contractual test is identifiable even if the asset is not tradable or separable from the acquiree or from other rights and obligations. For example:

(a) The acquiree leases production facilities under operating leases whose terms are favorable relative to market conditions. The terms of the lease expressly prohibit the transfer of the lease (through sale or sublease). The amount by which lease terms are more favorable than current market transactions for the same or similar leased items is an intangible asset that meets the contractual test to be recognized separately from goodwill, even though the buyer does not may sell or otherwise transfer the lease.

(b) The acquiree owns and operates a nuclear power plant. The license to operate such a power plant is an intangible asset that meets the contractual criterion for recognition separately from goodwill, even if the acquirer cannot sell or transfer such a license separately from the acquired power plant. The acquirer may recognize the fair value of the license and the fair value of the power plant as a single asset for financial reporting purposes if the useful lives of the assets are similar.

(c) The acquiree owns a technology patent. It licensed this patent to others for their exclusive use outside the domestic market in exchange for receiving a set percentage of future foreign earnings. Both the technology patent and the related license agreement satisfy the contractual test for recognition separately from goodwill, even if the patent and the related license agreement could not be sold or exchanged separately.

B33. The separability test means that the acquired intangible asset can be separated or separated from the acquiree and sold, transferred, licensed, leased or exchanged individually or together with a related contract, identifiable asset or liability. An intangible asset that a buyer would be able to sell, license, or otherwise exchange for something of value satisfies the separability test, even if the buyer does not intend to sell, license, or otherwise exchange it. An acquired intangible asset satisfies the separability test if there is evidence of exchange transactions involving assets of the same kind or assets of a similar type, even if such transactions are infrequent and regardless of whether the buyer is involved. For example, lists of customers and subscribers are often protected by a license and thus satisfy the severability test. Even if the acquired entity believes that its customer lists have characteristics that are different from other customer lists, the fact that customer lists as a whole are often licensed means that the acquired customer list satisfies the severability test. However, a list of customers acquired in a business combination would not satisfy the severability test if confidentiality covenants or other agreements prevent the entity from selling, renting, or otherwise exchanging information about its customers.

B34. An intangible asset that is itself inseparable from the acquiree or combined entity satisfies the separability test if it is separable when taken together with a related contract, identifiable asset or liability. For example:

(a) market participants exchange intangible assets, represented by deposit liabilities and related depositor relationships, in observable exchange transactions. Therefore, the acquirer must recognize the depositor relationship intangible asset separately from goodwill.

(b) the acquiree owns a registered trade mark as well as documented but non-patented technical expertise used in the manufacture of the product under that trade mark. To transfer ownership of a trademark, the owner must also transfer everything necessary for the new owner to produce products or services that are indistinguishable from the products or services produced by the previous owner. Because unpatented technical knowledge must be separated from the acquiree or combined entity and sold in the event of a sale of the related brand, it satisfies the separability test.

Reacquired rights

B35. As part of a business combination, an acquirer may reacquire the right it previously granted to the acquiree to use one or more of the acquirer's recognized or unrecognized assets. Examples of such rights include the right to use the buyer's trade name under a franchise agreement or the right to use the buyer's technology under a licensing agreement. A reacquired right is an identifiable intangible asset that the acquirer recognizes separately from goodwill. IN paragraph 29 provides guidance on assessing a reacquired right, and paragraph 55 provides guidance on the subsequent accounting of a reacquired right.

B36. If the terms of the contract giving rise to the reacquired right are favorable or unfavorable compared to the terms of current market transactions for the same or similar items, the buyer must recognize a gain or loss on the settlement. IN paragraph B52 provides guidance on estimating such gain or loss from the settlement.

Selected labor and other unidentifiable items

B37. The buyer aggregates as goodwill the cost of an acquired intangible asset that is not identifiable at the acquisition date. For example, the acquirer may assign value to the availability of a selected workforce, which is the existing workforce that allows the acquirer to continue operating the acquired business from the date of acquisition. The selected workforce does not represent the intellectual capital of the skilled workforce - the (often specialized) knowledge and experience that the acquiree's employees bring to their work. Because the selected labor is not an identifiable asset that is recognized separately from goodwill, any cost attributed to it is included in goodwill.

B38. The acquirer also totals as goodwill any value attributed to items that do not qualify as an asset at the acquisition date. For example, the acquirer might assign value to potential contracts that the acquiree is negotiating with prospective new customers at the acquisition date. Because such potential contracts are not themselves assets at the acquisition date, the acquirer does not recognize them separately from goodwill. The acquirer shall not subsequently reclassify the value of these contracts from goodwill because of events that occur after the acquisition date. However, the acquirer must evaluate the facts and circumstances surrounding events that occur shortly after the acquisition to determine whether a separately identifiable intangible asset existed at the acquisition date.

B39. After initial recognition, the acquirer accounts for intangible assets acquired in a business combination in accordance with IFRS(IAS) 38 "Intangible assets". However, as described in point 3 IFRS(IAS) 38, the accounting for certain acquired intangible assets after initial recognition is subject to otherIFRS (IFRS).

B40. The identifiability criteria determine whether an intangible asset is recognized separately from goodwill. However, the criteria do not provide guidance for measuring the fair value of an intangible asset or limit the assumptions used in estimating the fair value of an intangible asset. For example, a buyer would take into account the assumptions that market participants use when pricing an intangible asset, such as expectations of future contract renewal, when estimating fair value. It is not at all necessary that the renewal itself meets the criteria of identifiability. (However, see paragraph 29 , which contains an exception to the fair value measurement principle for reacquired rights recognized in a business combination). IN paragraphs 36 and 37 IAS 38 provides guidance on determining whether intangible assets should be combined into the same unit of account with other intangible or tangible assets.

(as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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Measuring the fair value of specific identifiable assets and non-controlling interests in an acquiree (application points 18 and 19)

Assets with uncertain cash flows (valuation reserves)

B41. The acquirer is not required to recognize a separate acquisition-date valuation reserve for assets acquired in a business combination that are measured at acquisition-date fair value because the effects of uncertainty about future cash flows are included in the fair value measurement. For example, because this IFRS requires the acquirer to measure acquired receivables, including loans, at fair value at the acquisition date, the acquirer does not recognize a separate valuation allowance for contractual cash flows that are assessed as uncollectible at that date.

Assets under an operating lease under which the acquiree is the lessor

B42. When estimating the acquisition-date fair value of an asset, such as a building or patent, that is under an operating lease under which the acquiree is the lessor, the acquirer must take into account the terms of the lease. In other words, the buyer does not recognize a separate asset or liability if the terms of the operating lease are favorable or unfavorable compared to market conditions, as required by paragraph B29 in relation to a lease in which the acquiree is the lessee.

Assets that the buyer intends not to use or to use in a way that differs from the ways that other market participants would use such assets

B43. To protect its competitive position, or for other reasons, the acquirer may intend not to actively use the acquired non-financial asset in accordance with its highest and best use. For example, this might be true in the case of an acquired research and development intangible asset that the buyer plans to use discreetly to prevent others from using it. However, the acquirer must measure the fair value of a non-financial asset by taking into account its highest and best use by market participants in accordance with acceptable valuation assumptions, both at initial measurement and in measuring fair value less costs of disposal for a subsequent impairment test. .

(Clause B43 as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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Non-controlling interest in the acquiree

B44. This IFRS permits an acquirer to measure non-controlling interest in an acquiree at fair value at the acquisition date. In some cases, the acquirer may estimate the fair value of the noncontrolling interest at the acquisition date based on the quoted price of the common stock in an active market (ie, shares not held by the acquirer). In other situations, however, an active market quoted price for the common stock may not be available. In such situations, the acquirer estimates the fair value of the non-controlling interest using other valuation techniques.

(paragraph B44 as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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B45. The fair value of the acquirer's interest in the acquiree and the non-controlling interest on a per share basis may differ. The main difference is likely to be the inclusion of a control premium in the per-share fair value of the acquirer's interest in the acquiree or, conversely, the inclusion of a non-control discount (also referred to as a discount) in the per-share fair value of the non-controlling interest if Market participants would take such a premium or discount into account when pricing the non-controlling interest.

(as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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Valuation of goodwill or gain from bargain purchase

Measuring the fair value of the acquirer's interest in the acquiree at the acquisition date using valuation techniques (application paragraph 33)

B46. In a business combination without the transfer of consideration, the acquirer must replace the acquisition-date fair value of its interest in the acquiree with the acquisition-date fair value of the consideration transferred to measure goodwill or bargain purchase gain (see paragraphs 32 - 34).

(as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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Special considerations when applying the acquisition method to a business combination (application paragraph 33)

B47. If two mutual entities combine, the fair value of the equity or interests of the acquiree (or the fair value of the acquiree) can be measured more reliably than the fair value of the interests transferred by the acquirer. In this situation paragraph 33 requires the acquirer to determine the amount of goodwill by using the acquisition-date fair value of the acquiree's interest instead of the acquisition-date fair value of the acquirer's interest transferred as consideration. In addition, an acquirer in a business combination must recognize the net assets of the acquiree as a direct addition to equity or shareholders' equity in its statement of financial position rather than as an addition to retained earnings, which is consistent with the manner in which other types of entities use the acquisition method. .

B48. Although mutual enterprises are in many ways similar to other types of business, they have distinctive features that are due primarily to the fact that their participants are both clients and owners. Members of mutual businesses generally expect to receive benefits for their membership, often in the form of a reduction in the fees charged for goods and services or in the form of a patronage dividend. The portion of patronage dividends allocated to each member is often based on the volume of turnover of the member's business with the mutual enterprise during the year.

B49. The measurement of the fair value of a mutual entity must include assumptions that market participants would make about the participant's future benefits, as well as any other relevant assumptions made by market participants about the mutual entity. For example, the present value method may be used to estimate the fair value of a mutual entity. The cash flows used as inputs to the model must be determined based on the mutual entity's expected cash flows, which typically reflect a reduction in the participant's compensation, such as a reduction in the fees charged for goods and services.

(as amended by IFRS 13 , approved By Order of the Ministry of Finance of Russia dated July 18, 2012 N 106n)

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Determining what constitutes part of a business combination transaction (application paragraphs 51 and 52)

B50. An acquirer must consider the following factors, which are not mutually exclusive and each of which is not conclusive, to determine whether the transaction is part of an exchange for the acquiree or whether the transaction is separate from a business combination:

(a) reasons for the transaction - Understanding the reasons why the parties to the combination (the buyer and the acquiree and their owners, directors and managers - and their agents) entered into a particular transaction or agreement can help determine whether such transaction or agreement is part of the transferred consideration and assets acquired or liabilities assumed. For example, if a transaction is conducted primarily for the benefit of the acquirer or the combined entity rather than for the benefit of the acquiree or its former owners before the combination, that portion of the transaction price paid (and any related assets or liabilities) is less likely to be part of the exchange for the acquiree. company. Accordingly, the acquirer would account for that portion separately from the business combination.

(b) who initiated the transaction - Understanding who initiated the transaction can also help determine whether the transaction is part of an exchange for the entity being acquired. For example, a transaction or other event initiated by the acquirer may be intended to provide future economic benefits to the acquirer or the combined entity, but the acquiree or its former owners may receive little or no benefit before the combination. On the other hand, it is less likely that a transaction or agreement initiated by the acquiree or its former owners will benefit the acquirer or the combined entity. However, such a transaction is more likely to be part of a business combination.

(c) Timing of the transaction - The timing of the transaction can also help determine whether it is part of an exchange for the entity being acquired. For example, a transaction between an acquirer and the acquiree that occurs during negotiations of the terms of a business combination may have been entered into in anticipation of the business combination to provide future economic benefits to the acquirer or the combined entity. In this case, the acquiree or its former owners before the combination are likely to receive little or no benefit from the transaction other than the benefits they would receive as part of the combined entity.

Effective resolution of pre-existing relationships between the buyer and the acquiree in a business combination (application paragraph 52(a)

B51. The acquirer and the acquired business may have a relationship, referred to herein as a “pre-existing relationship,” that existed before they considered a business combination. The pre-existing relationship between the buyer and the acquired business may be contractual (for example, seller and client or licensor and licensee) or non-contractual (for example, plaintiff and defendant).

B52. If the existing business combination resolves a pre-existing relationship, the acquirer will recognize gain or loss measured as follows:

(a) for pre-existing non-contractual relationships (such as litigation) - at fair value.

(b) for pre-existing contractual relationships - the lesser of the amounts(i) and (ii):

(i) the amount by which the contract is favorable or unfavorable from the buyer's point of view compared with the terms of current market transactions for the same or similar items. (An unfavorable contract is a contract that is unfavorable relative to current market conditions. Such a contract is not necessarily an onerous contract in which the unavoidable costs required to fulfill the obligations under the contract exceed the economic benefit expected to be received under the contract).

(ii) the amount of any settlement provisions contained in the contract that is available to the counterparty for whom the contract is unfavorable.

If (ii) is less than (i) , the difference is included in the accounting for the business combination.

The amount of gain or loss recognized may depend in part on whether the acquirer previously recognized the related asset or liability, and the reported gain or loss may therefore differ from the amount calculated in accordance with the requirements set out above.

B53. A pre-existing relationship may be a contract that the buyer recognizes as a reacquired right. If a contract includes terms that are favorable or unfavorable compared to prices for current market transactions for the same or similar items, the acquirer recognizes, separate from the business combination, gain or loss on the effective settlement of the contract, measured in accordance with paragraph B52.

Contingent payment agreements to employees or selling shareholders (application paragraph 52(b)

B54. Whether contingent payment agreements to employees or selling shareholders constitute contingent consideration in a business combination or separate transactions depends on the nature of the agreements. Understanding why an acquisition agreement includes a contingent payment provision, who initiated the agreement, and when the parties entered into the agreement can be helpful in assessing the nature of the agreement.

B55. If it is unclear whether an agreement to pay employees or selling shareholders is part of an exchange with the acquiree or a transaction separate from the business combination, the acquirer should consider the following:

(a) Continuing Employment - The terms of continuing employment established by the selling shareholders who become key employees may be an indication of the nature of the contingent consideration agreement. Appropriate terms of continued employment may be included in the employment agreement, acquisition agreement, or some other document. A contingent consideration agreement, under which payments automatically cease upon termination of employment, is consideration for services provided after the merger. Agreements in which termination of employment does not affect contingent payments may specify that contingent payments are additional consideration rather than remuneration.

(b) Period of continuing employment - If the period of required employment is the same as or longer than the period of contingent payments, that fact may indicate that the contingent payments are, in substance, remuneration.

(c) Level of remuneration - Situations where the remuneration of employees, other than contingent payments, is at a reasonable level compared with the remuneration of other key employees in the combined entity may indicate that the contingent payments are additional consideration rather than remuneration.

(d) Additional payments to employees - If selling shareholders who do not become employees receive lower contingent payments per share than selling shareholders who become employees of the combined entity, that fact may indicate that the additional amount of contingent payments to selling shareholders who become employees is remuneration.

(e) Number of Shares Owned - The relative number of shares owned by the selling shareholders who remain key employees may be an indication of the nature of the contingent consideration agreement. For example, if the selling shareholders who owned substantially all the shares in the acquiree continue to serve as key employees, this may indicate that the agreement is essentially a profit-sharing arrangement, the purpose of which is to provide compensation for services provided provided after the merger. Alternatively, if the selling shareholders, who continue to serve as key employees, owned only a small number of shares in the acquiree and all selling shareholders receive the same amount of contingent consideration per share, this fact may indicate that the contingent payments are additional consideration. Pre-acquisition interests held by parties related to the selling shareholders who continue to serve as key employees, such as family members, also need to be taken into account.

(f) Relationship to Valuation - If the initial consideration transferred at the acquisition date is based on the lower end of the range established at the acquisition's valuation, and the contingent payment formula is related to the valuation method, that fact may suggest that the contingent payments are additional consideration. In contrast, if the contingent payment formula is consistent with previous profit-sharing agreements, this fact may suggest that the essence of the agreement is the provision of a fee.

(g) Formula for Determining Consideration - The formula used to determine the contingent payment may be helpful in assessing the nature of the agreement. For example, if the contingent consideration is defined as a multiple of earnings, this may suggest that the liability involves contingent consideration in a business combination and that the formula is intended to establish or test the correct fair value of the acquiree. In contrast, a contingent payment that is a specified percentage of income might suggest that the obligation to employees is a profit-sharing agreement to reward employees for services provided.

(h) Other Agreements and Matters - The terms of other agreements with the selling shareholders (such as non-competition agreements, effective agreements, consulting agreements and property lease agreements) and the treatment of income taxes on contingent assets. payments may indicate that the contingent payments relate to something other than consideration for the acquiree. For example, in connection with an acquisition, the buyer might enter into a property lease agreement with a significant selling shareholder. If the lease payments specified in the lease agreement are significantly below market price, some or all of the contingent payments to the lessor (selling shareholder) required under a separate agreement regarding contingent payments could, in essence, be payments for the use of the leased property that the buyer must be recognized separately in its financial statements prepared after the combination. In contrast, if the lease agreement specifies lease payments that are consistent with market conditions for the leased property, the contingent payment agreement to the selling shareholder may be contingent consideration in a business combination.

The acquirer's share-based payment awards are exchanged for the acquiree's employee benefits through share-based payments (application paragraph 52(b)

B56. The acquirer may exchange its share-based payment awards (replacement compensation) for employee benefits of the acquiree. The exchange of stock options or other awards that are settled by share-based payment in connection with a business combination is accounted for as a modification of share-based payment awards in accordance with IFRS 2 "Share-based payment." If an acquirer replaces the acquiree's consideration, a market valuation of the replacement consideration, in whole or in part, must be included in the measurement of the consideration transferred in the business combination. IN points B57 - B62 provides guidance on market valuation allocation. However, in situations where the acquiree's awards would expire as a result of a business combination, and if the acquirer replaces such awards even though it is not obligated to do so, then the market measurement of the replacement awards should be fully recognized as the cost of the awards in the financial statements prepared after the combination in accordance with IFRS 2 . That is, the market valuation of such consideration should not be included in the valuation of the consideration transferred in a business combination. The buyer is obligated to replace the benefits of the acquired enterprise if the acquired enterprise or its employees have the ability to force a replacement. For example, for purposes of this guidance, the acquirer must replace the acquiree's awards if replacement is required:

(a) the terms of the acquisition agreement;

(b) the terms of the acquiree's consideration; or

(c) applicable laws and regulations.

B57. To determine the portion of the replacement consideration that is part of the consideration transferred for the acquiree and the portion that is consideration for services provided post-combination, the acquirer must evaluate both the replacement consideration provided by the acquirer and the acquiree's consideration at the acquisition date in accordance with With IFRS 2 . The portion of the market measure of substitution consideration that is the portion of the consideration transferred in exchange for the acquiree is equal to the portion of the acquiree's consideration that is attributable to services provided after the combination.

B58. The portion of the replacement consideration that is attributable to services provided after the combination is a market measure of the acquiree's compensation multiplied by the ratio of the portion of the elapsed vesting period to the greater of the cumulative vesting period or the acquiree's original vesting period of compensation. The transition period is the period during which all specified transition conditions must be met. Transition conditions are defined in IFRS 2.

B59. The portion of non-carrying replacement consideration attributable to services provided after the combination, and therefore recognized as cost of the consideration in the post-combination financial statements, equals the aggregate market valuation of the replacement consideration less the amount attributable to services provided before the combination. Therefore, the acquirer attributes any excess of the market estimate of the replacement consideration over the market estimate of the acquiree's consideration to post-combination services and recognizes the excess as the cost of the consideration in the post-combination financial statements. The acquirer must attribute a portion of the replacement consideration to services provided after the combination if it requires services to be provided after the combination, regardless of whether the employees performed all of the services required to vest their benefits to the acquiree prior to the acquisition date.

B60. The portion of non-vesting replacement fees attributable to services provided before the combination and the portion attributable to services provided after the combination should reflect the best available estimate of the amount of replacement fees expected to vest. For example, if the market valuation of the portion of replacement consideration attributable to pre-combination services is CU100 and the acquirer expects only 95 percent of the consideration to vest, the amount included in the consideration transferred in the combination is CU95. Changes in the estimated number of replacement awards expected to vest are reflected in the cost of awards for the periods in which the changes or disposals occur rather than as adjustments to the consideration transferred in a business combination. Similarly, the consequences of other events, such as modifications, or the ultimate outcome of awards with performance terms that occur after the acquisition date, are accounted for in accordance with IFRS 2 when determining the cost of remuneration for the period in which the relevant event occurred.

B61. The same requirements for determining the portion of the replacement award attributable to pre-combination and post-combination services apply regardless of whether the replacement award is classified as a liability or as an equity instrument in accordance with the provisions of IFRS 2 . All changes in the market measurement of awards classified as liabilities after the acquisition date and the resulting income tax consequences are recognized in the acquirer's post-combination financial statements in the period(s) in which the changes occur.

B62. Income taxes on replacement awards on share-based payments should be recognized in accordance with the provisions of IAS 12 "Income tax".

Transactions of an acquiree involving share-based payments settled in equity instruments

B62A. The acquiree may have outstanding share-based payment transactions that the acquirer does not exchange for its share-based payment transactions. While unconditional, such share-based payment transactions of the acquiree are part of the non-controlling interest in the acquiree and are measured based on their market valuation. When unfulfilled, they are valued at their market value, as if the date of acquisition was the date on which the mutual obligations arose under paragraphs 19 and 30.

B62B. The market valuation of outstanding share-based payment transactions is allocated to non-controlling interest based on the ratio of the portion of the completed vesting period to the longer of the cumulative vesting period or the initial vesting period of the share-based payment transaction. The remainder is allocated to post-merger services.

Other IFRSs that provide guidance on subsequent measurement and accounting (application paragraph 54)

B63. Examples of other IFRSs that provide guidance on the subsequent measurement and accounting of assets acquired and liabilities assumed in a business combination include:

(a) IAS 38 governs the accounting for identifiable intangible assets acquired in a business combination. The acquirer measures goodwill at the amount recognized at the acquisition date less any accumulated impairment losses. IAS 36 “Impairment of assets” governs the accounting for impairment losses.

(b) IFRS 4 “Insurance Contracts” provides guidance on the subsequent accounting for insurance contracts acquired in a business combination.

(c) IAS 12 governs the subsequent accounting for deferred tax assets (including unrecognized deferred tax assets) and liabilities acquired in a business combination.

AND (j) for each contingent liability recognized in accordance with paragraph 23 , information required in paragraph 85 IAS 37 Provisions, Contingent Liabilities and Contingent Assets. If a contingent liability is not recognized because its fair value cannot be measured reliably, the acquirer must disclose:

(i) information required in accordance with paragraph 86 of IAS 37; And

(ii) the reasons why the liability cannot be measured reliably.

(k) the total amount of goodwill expected to be deductible for tax purposes.

(l) for transactions that are recognized separately from the acquisition of assets and the assumption of liabilities in a business combination in accordance with paragraph 51:

(i) a description of each transaction;

(ii) how the buyer accounted for each transaction;

(iii) the amounts recognized for each transaction and the line item in the financial statements in which each amount is recognized; And

(iv) if the transaction is an effective settlement of a pre-existing relationship, the method used to determine the settlement amount.

(m)disclosure of separately recognized transactions required by point (l) must include the amount of acquisition-related costs and, separately, the amount of costs recognized as an expense and the item or items in the statement of comprehensive income in which such costs are recognized. The amount of any issuance costs not recognized as an expense and how they were recognized should also be disclosed.

(n) with a bargain purchase (see. paragraphs 34 - 36):

(i) the amount of any income recognized in accordance with paragraph 34 , and the line item in the statement of comprehensive income in which the income is recognized; And

(ii) a description of the reasons why the transaction resulted in income.

(o) for each business combination in which the acquirer owns less than 100 percent of the equity interest of the acquiree at the acquisition date:

(i) the amount of non-controlling interest in the acquiree measured at the acquisition date and the basis for measuring that amount; And

(ii) for each non-controlling interest in an acquiree measured at fair value, the valuation method(s) and significant inputs used in the relevant model to measure that value.

(q) the following information:

(i) the amounts of revenue and profit or loss of the acquiree from the date of acquisition included in the consolidated statement of comprehensive income for the reporting period; And

(ii) the revenue and profit or loss of the combined entity for the current reporting period as if the acquisition date for all business combinations that occurred during the year had been the beginning of the annual reporting period.

If it is not practicable to disclose any information required by this subparagraph, the buyer must disclose that fact and explain why the disclosure is impracticable. This IFRS uses the term “impracticable” to have the same meaning as IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors."

B65. For individually immaterial business combinations that occur during the reporting period that become material when taken in the aggregate, the acquirer must disclose the information required by paragraph B64(e) - (q) collectively.

B66. If the acquisition date in a business combination is after the end of the reporting period but before the financial statements are authorized for issue, the acquirer must disclose the information required by paragraph B64 unless the initial accounting for the business combination is incomplete at the date the financial statements are authorized for issue. In this situation, the buyer must describe what disclosures could not be made and the reasons why they could not be made.

B67. To achieve the goal specified in paragraph 61 , the acquirer must disclose the following information for each material business combination or in the aggregate for business combinations that are not individually material but are material in the aggregate:

(a) if the initial accounting for the business combination has not been completed (see paragraph 45 ) in relation to any specific assets, liabilities, non-controlling interests or items of consideration and the amounts recognized in the financial statements of the business combination have therefore been determined only provisionally:

(i) the reasons why the initial accounting for the business combination has not been completed;

(ii) assets, liabilities, equity interests or items of consideration for which initial accounting has not been completed; And

(iii) the nature and amount of any measurement period adjustments recognized during the reporting period in accordance with paragraph 49.

(b) for each reporting period after the acquisition date until the entity collects, sells or otherwise loses its right to the contingent consideration asset, or until the entity settles the contingent consideration liability, or until such obligation has been canceled or expired:

(i) any changes in amounts recognized, including any differences arising on settlement;

(ii) any changes in the range of results (undiscounted) and the reasons for such changes; And

(iii) the valuation methods and key inputs used by the relevant model to estimate contingent consideration.

(c) in respect of contingent liabilities recognized in a business combination, the acquirer shall disclose the information required by paragraphs 84 and 85 IAS 37, for each class of provision.

(d) a reconciliation of the carrying amount of goodwill at the beginning and end of the reporting period, showing separately:

(i) the gross amount and accumulated impairment losses at the beginning of the reporting period.

(ii) additional goodwill recognized during the reporting period other than goodwill included in a disposal group that, on acquisition, qualifies for classification as held for sale in accordance with IFRS 5 "Non-current assets held for sale and discontinued operations."

(iii) adjustments made as a result of subsequent recognition of deferred tax assets during the reporting period in accordance with paragraph 67.

(iv) goodwill included in a disposal group classified as held for sale in accordance with IFRS 5 , and goodwill that was derecognized during the reporting period and that was not previously included in a disposal group classified as held for sale.

(v) impairment losses recognized during the reporting period in accordance with IAS 36. ( IAS 36 requires disclosure of recoverable amount and impairment of goodwill in addition to this requirement.)

(vii) any other changes in the carrying amount during the reporting period.

(viii) the gross amount and accumulated impairment losses at the end of the reporting period.

(e) the amount and explanation of any profit or loss recognized in the current reporting period that:

(i) relate to identifiable assets acquired or liabilities assumed in a business combination that was completed in the current or prior reporting period; And

(ii) are of such size, nature or scope that their disclosure is relevant to an understanding of the financial statements of the combined entity.

Transitional provisions for a business combination involving only mutual entities or a business combination carried out only by means of a contract (application paragraph 66)

B68. Paragraph 64 provides that this IFRS applies prospectively to a business combination for which the acquisition date is at the beginning of the first annual reporting period beginning on or after 1 July 2009, or a later date. Early use is permitted. However, an entity shall apply this IFRS only at the beginning of an annual reporting period that begins on or after 30 June 2007. If an entity applies this IFRS before it becomes effective, the entity shall disclose that fact and at the same time apply IAS 27 (as amended 2008).

B69. The requirement to apply this IFRS prospectively has the following effects on a business combination that involves only mutual entities or is achieved only by contract if the acquisition date for that business combination is before the application of this IFRS:

(a) Classification - An entity shall continue to classify the previous business combination in accordance with the entity's previous accounting policies used to account for that combination.

(b) Previously recognized goodwill - At the beginning of the first annual period to which this IFRS is applied, the carrying amount of goodwill arising in a previous business combination shall be its carrying amount at that date in accordance with the entity's previous accounting policies. In determining this amount, an entity shall exclude the carrying amount of any accumulated amortization of such goodwill and the corresponding reduction in goodwill. No other adjustments to the carrying amount of goodwill are required.

(c) Goodwill previously recognized as a deduction from equity - As a result of the entity's previous accounting policies, goodwill arising in connection with a previous business combination may have been recognized as a deduction from equity. In this situation, an entity shall not recognize such goodwill at the beginning of the first annual period to which this IFRS is applied. In addition, an entity should not recognize in profit or loss any part of such goodwill when all or part of the business to which the goodwill relates is disposed of, or when the cash-generating unit to which the goodwill relates is impaired.

(d) Subsequent accounting for goodwill - From the beginning of the first annual period to which this IFRS is applied, an entity shall cease amortizing goodwill arising in a previous business combination and shall test goodwill for impairment in accordance with IAS 36.

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