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Description :
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IFRS 3 is part of the first phase of a project which has the objective to improve the quality of the accounting for business combinations, for goodwill and intangible assets.
The reasons for IASB issuing this standard was to reduce existing options established in superseded IAS 22 Business Combinations (IAS 22) and under national accounting regimes and to seek international convergence on the accounting for business combinations.
The main features of IFRS 3 are:
• to prohibit the use of the pooling of interests method and to require all business combinations within the scope of IFRS 3 to be accounted for using the purchase method,
• to have goodwill and intangible assets with indefinite useful lives to be tested for impairment on an annual basis instead of being amortised,
• to have restructuring costs treated as expenses, unless they are pre-existing liabilities of the acquired entity,
• to require intangible items acquired to be recognised as assets separately from goodwill if they meet certain criteria, and
• to measure initially at fair value identifiable assets acquired, liabilities and contingent liabilities incurred or assumed.
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Working groups :
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EFRAG Technical Expert Group (EFRAG TEG) -
EFRAG Secretariat -
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Current Project Status :
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Published in Official Journal
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Efrag Output
No 'Efrag Output'
Comment Letters
No 'Comment Letters'
Other Input
No 'Other Input'
News Items
No 'Linked News Items'
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