Insights into IFRS 3 - Reverse acquisitions in the scope of IFRS 3

Louise Kelly
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Acquisitions of businesses can take many forms and can have a fundamental impact of the acquirer’s operations, resources and strategies.

These acquisitions are described in many ways depending on the underlying facts and circumstances: mergers, takeovers and business combinations are all terms that are used, and the accounting and disclosure requirements for all of them are set out in IFRS 3 ‘Business Combinations’.

Our ‘Insights into IFRS 3’ series summarises the key areas of the Standard, highlighting aspects that are difficult to interpret and revisiting relevant features that could impact reporting entities. This article follows on from our published articles on ‘Insights into IFRS 3 – Identifying the acquirer’ and ‘Insights into IFRS 3 – Reverse acquisitions explained’ and presents guidance for an area which is challenging in practice – reverse acquisitions.

This article focuses on reverse acquisitions within the scope of IFRS 3. When a reverse acquisition falls outside of the scope of IFRS 3, further details on how to account for it can be found in our IFRS Viewpoint – ‘Reverse acquisitions outside the scope of IFRS 3’.