Business Combination
Accounting glossary · Understand, connect, apply
A business combination occurs when an acquirer obtains control of one or more businesses. IFRS 3 provides the accounting requirements for combinations within its scope.
Example
A retailer buys a chain of operating shops together with its staff and operating processes. If the acquired set qualifies as a business and control passes, the transaction is a business combination.
Remember the difference
Buying a collection of assets can require different accounting. Determine whether the acquired set meets the definition of a business.
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Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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