Distinguishing between a business combination and an asset purchase in the extractives industry (Mar 2014)
This publication addresses the accounting requirements, judgements, and difficulties in distinguishing asset acquisition transactions between:
- A 'business combination', and
- An asset purchase.
Key topics that are addressed in the publication include:
- Differences in between the accounting requirements for a business combination and an asset acquisition
- The definition of a ‘business’, and the interaction of consideration regarding inputs, processes, and outputs as well as the existence of any goodwill.
- Types of transactions that may, or may not, give rise to a business combination, or where judgement is required
- Reverse acquisitions (‘backdoor listings’)
- Analysis of the 2013 IASB Staff Paper regarding the definition of a business.
(Note: Principles and examples included are equally relevant and applicable to entities operating in industries other than the extractives industry)