The International Accounting Standards Board (IASB) has published for public comment proposals for a limited amendment to IFRS 3 Business Combinations. The proposals are set out in the Exposure Draft Combinations by Contract Alone or Involving Mutual Entities. The IASB invites comments on the Exposure Draft by 31 July 2004.
The amendments being proposed to IFRS 3 are an interim solution to the issue of the accounting for combinations involving mutual entities or combinations in which separate entities are brought together by contract alone. The IASB identified the problem while finalising IFRS 3, but decided that it could not provide an interim solution without first exposing that solution for public comment. Given that very few transactions are likely to be affected by this amendment, the IASB thought it important that the March 2004 publication of IFRS 3 should not be delayed while it addresses this issue.
The main features of the IASB’s proposals are: