The standards setter says the proposed amendments provide clearer application guidance to help distinguish between a business and a group of assets when applying IFRS 3. They also offer clarification on how a company should account for previously held interest in a business, if acquiring control, or joint control, of that business.

IASB says it was informed that there is diversity in practice in accounting for previously held interests in the assets and liabilities of a joint operation in two types of transactions: those in which an entity obtains control of a business that is a joint operation and those in which it obtains joint control of a business that is a joint operation. The proposed amendments to IFRS 3 and IFRS 11 are intended to clarify the accounting for each of these types of transactions.

In addition the IASB says its post-implementation review (PIR) process indicates that while there is general support for the accounting requirements of IFRS 3, it also identified some areas where further research will be undertaken. These include the effectiveness and complexity of testing goodwill for impairment and subsequent accounting for goodwill.

As part of this, the board is considering reviewing IAS 36 and making improvements to the impairment model, particularly whether there is scope for simplification.

The deadline for comments on the proposals is 31 October.

The Exposure Draft—Definition of a Business and Accounting for Previously Held Interests (Proposed Amendments to IFRS 3 and IFRS 11)— is available here.