Business combinations – Dealing with practical challenges (Part A)
Introduction Mergers and acquisitions are becoming more and more common as entities aim to achieve their growth objectives other than in an organic way. IFRS 3 / Ind AS 103 – Business combinations transform the way companies plan and execute their acquisition strategies. This standard applies to most of business combinations, including amalgamations/ mergers and acquisitions. This standard lays down the principles of accounting for business combinations by way of acquisitions or mergers. Ind AS also provides guidance on a combination of entities or businesses under common control. However, IFRS does not provide guidance on combinations under common control. The companies that engage in business combination transactions face various challenges in accounting and financial reporting of such transactions, including: 1. Accounting for purchase consideration transferred by acquirer and other transaction costs incurred in the transaction. 2. Recognition and measurement of the net assets a