IFRS 3 Business Combinations |

Complete detection of all IFRS 3 intangibles

Complete detection of all IFRS 3 intangibles explains it all, because detecting intangible assets can be a complex and challenging matter. Strategies to detect identifiable intangible assets vary depending on the facts and circumstances of the business combination and usually require a full review of the transaction. It is important to understand the business of the acquiree, what intangible resources it depends on and how these may translate into identifiable intangible assets. It should be possible to explain the acquired business in terms of the resources it uses to generate profits and how these are reflected in the acquiree’s assets and liabilities. In other words ask the question: what has been paid for?

Use the business case and transaction case … Read more

Case value intangibles in business combinations

Case value intangibles in business combinations provides a comprehensive business case of valuation of an acquisition of a regional provider of professional services, ProfServCo. The following intangible assets were identified as of the date of the combination:

  1. Trade name Case value intangibles in business combinations
  2. Service concession number Case value intangibles in business combinations
  3. Customer relationships Case value intangibles in business combinations
  4. Non-competition agreements. Case value intangibles in business combinations

ProfServCo was acquired as part of a business combination under IFRS 3 by AcquiCo on 30 September 20×2.

1. Trade name

ProfServCo operates in a region of the United States and has been a leading provider in its service market since it was founded in the 1970’s. The Company’s trade … Read more

Ultimate guide to IFRS 3 Business combinations

Ultimate guide to IFRS 3 Business combinations outlines the accounting when an acquirer obtains control of a business (e.g. an acquisition or merger). Such business combinations are accounted for using the ‘acquisition method’, which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date.Ultimate guide to IFRS 3 Business combinations


IFRS 3 Definition Acquiree: The business or businesses that the acquirer obtains control of in a business combination. Ultimate guide to IFRS 3 Business combinations

IFRS 3 Definition Acquirer: The entity that obtains control of the acquiree.

Business combination

When a buyer (acquirer) takes control of another business (the acquiree) with a transaction, it is called a business combination. There are three important considerations in this definition:… Read more

Legal titles and secrets as assets

In a Business Combinations, these –by definition– are intangible assets and are therefore recognised separately from goodwill, provided that their fair values can be measured reliably. These intangible assets meet the definition of an intangible asset because they again –by definition– arise from contractual or other legal rights. 

Patented technology

A patent is an exclusive right granted for an invention. While it is certainly true that not all enterprises develop patentable inventions, it is a wrong to believe that patents only apply to complex physical or chemical processes and products or that they are only useful to large corporations. Patents can be obtained for any area of technology from paper … Read more

IFRS 3 What are the different classifications of software?

IFRS 3 What are the different classifications of software?, well off course it depends.

Computer software can be classified as either a tangible asset, i.e. property, plant and equipment or an intangible asset, depending on the level of integration with the related hardware.

Software integrated in hardware

In cases where software is an integral part of the related hardware, i.e. the hardware cannot operate without the software, the software will be treated as property, plant and equipment together with the related hardware already recognised, which will normally be computer equipment, a laboratory computer equipment (e.g. computer hardware and related operating systems are recognised under PPE). In such a case, the Accounting Policy on Property, Plant and Equipment shall apply.

IFRS 3 What are the different classifications of software‘Standalone’

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Customer relationships valuation


Customer relationships valuation is based on valuation model. Here such a valuation model is presented to value customer contracts and the related customer relationship and the non-contractual customer relationships, as per IFRS 3 Business Combinations.

References (to familiarise yourself with the subject):

Customer contracts and the related customer relationships
Non-contractual customer relationships
Order or production backlog

What are the inputs to the model?


Revenue – represents revenue from existing customer relationships for existing products. Includes contractual and non-contractual relationships (even those without current backlog or commitments). Separate valuation of a backlog revenue intangible asset can be considered if and when such backlog exists.

The model assumes a “market participant” point of view, therefore revenue/earnings assumptions … Read more