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    Acquirer

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    barira.acca

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    © All Rights Reserved
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    Acquirer

    Uploaded by

    barira.acca
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    Acquirer

    Uploaded by

    barira.acca

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    The acquisition method set out in IFRS 3 Business Combinations is applied from the viewpoint

    of the acquirer. The acquirer is the entity obtaining control over an acquiree, which must meet
    the definition of a business. An acquirer must therefore be identified whenever there is a
    business combination. In more complex situations, IFRS 3 takes a substance over legal form
    approach to identifying the acquirer. This approach looks beyond the rights of the combining
    entities themselves. It also considers the relative rights of the combining entities’ owners
    before and after the transaction.
    IFRS 3 provides the following indicators to consider
     The entity which transfers cash or other assets or incurs the liabilities.
     The entity which issues the equity interests.
     The entity whose size is significantly greater than that of the other combining entity or
    entities.
     The entity whose owners as a group retain the largest portion of the voting rights.
     The entity whose owners have the ability to elect or appoint or remove a majority of
    the members of the governing body of the combined entity.
     The entity whose (former) management dominates the combined management.
     The arguments supporting Greer Co or Layout Co as the acquirer are finely balanced.

    IFRS 10 Consolidated Financial Statements states that control exists when the investor
    has:

     Power over the investee


     Exposure, or rights, to variable returns from its involvement with the investee, and
     The ability to use its power over the investee to affect the amount of the investor’s
    returns.

    Extras:
    There could be a general presumption that Greer Co has achieved control over Layout Co by
    acquiring more than one half of the voting rights of the combined entity (51%)
    However, in deciding which company is the acquirer, the decision that Greer Co is the
    acquirer is influenced by the fact that Greer Co issued the equity interest, transferred
    cash and has the marginal controlling interest (51%).

    The arguments supporting Bimbi or Lental as the acquirer are finely balanced and therefore it is
    difficult to identify an acquirer in this case. It can be argued that Bimbi can be identified as the a
    cquirer, on the basis that:

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