The principal guidance for business combinations in US GAAP (ASC 805, Business Combinations) and IFRS (IFRS 3(R), Business Combinations) represents the culmination of the first major convergence project between the IASB and the FASB. Pursuant to ASC 805 and IFRS 3(R), all business combinations are accounted for using the acquisition method.
Upon obtaining control of another entity, the underlying transaction is measured at fair value, establishing the basis on which the assets, liabilities and noncontrolling interests of the acquired entity are measured. As described below, IFRS 3(R) provides an alternative to measuring noncontrolling interest at fair value with limited exceptions.
Although the new standards are substantially converged, certain differences still exist.
Other differences may arise due to different accounting requirements of other existing US GAAP and IFRS literature (e.g., identifying the acquirer, definition of control, definition of fair value, replacement of share-based payment awards, initial classification and subsequent measurement of contingent consideration, initial recognition and measurement of income taxes, initial recognition and measurement of employee benefits).
No further convergence is planned at this time.
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