On 14 May 2020, the International Accounting Standards Board (IASB) published 'Reference to the Conceptual Framework (Amendments to IFRS 3)' with amendments to IFRS 3 Business Combinations that update an outdated reference in IFRS 3 without significantly changing its requirements.
In March 2018, the IASB issued the 2018 Conceptual Framework and most references to the Framework included in IFRSs were updated to the 2018 Framework at that time. However, paragraph 11 of IFRS 3 Business Combinations, which continued to refer to the 1989 Framework, was not updated as this could have caused conflicts for entities applying IFRS 3 because the definition of assets and liabilities in the 2018 Framework differ from those in the 1989 Framework.
The changes in the Amendments to IFRS 3 Reference to the Conceptual Framework:
- update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;
- add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and
- add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.
Effective date and transition
The amendments to IFRS 3 are effective for annual periods beginning on or after 1 January 2022. Early application is permitted if an entity also applies all other updated references (published together with the updated Conceptual Framework) at the same time or earlier.