Has a Business Combination Occurred?

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Is a transaction a business combination?

IFRS 3 provides this guidance:

  1. Can be by: 

    Giving Cash
    Taking on Liabilities
    Issuing Shares, or 

    by not issuing consideration at all (i.e. by contract alone)

  2. Structures can be: 

    eg.
    An entity becoming a subsidiary of another
    An entity transfers its Net assets to another or to a new entity

  3. There must be an acquisition of a business

    A business generally has 3 elements

    1. Inputs 
    An economic resource (e.g. PPE) that creates outputs when one or more processes are applied to it 

    2. Process
    A system when applied to inputs, creates outputs

    3. Output
    The result of inputs and processes

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