Accounting issues on mergers and acquisitions—business combinations under IFRS and new UK GAAP (FRS 102)
Produced in partnership with Tessa Park of Kingston Smith LLP
Accounting issues on mergers and acquisitions—business combinations under IFRS and new UK GAAP (FRS 102)

The following Corporate guidance note Produced in partnership with Tessa Park of Kingston Smith LLP provides comprehensive and up to date legal information covering:

  • Accounting issues on mergers and acquisitions—business combinations under IFRS and new UK GAAP (FRS 102)
  • 'Business combination' accounting
  • Acquisition of a business vs acquisition of a company
  • Contingent consideration
  • Group reconstructions

This Practice Note covers how 'business combinations' are accounted for, together with some accounting issues that can arise as a result of the way M&A transactions are structured and how these can affect negotiation of the acquisition agreement.

This Practice Note looks at the following accounting standards, highlighting key areas of difference:

  1. the International Financial Reporting Standards (IFRS), developed and maintained by the International Accounting Standards Board (IASB) for global application (they are now mandated for use by over 100 countries, including the EU and most of the G20, with specific reference to IFRS 3 (Business combinations) (IFRS 3))

  2. FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), one of a number of Financial Reporting Standards (new UK GAAP) issued by the Financial Reporting Council (FRC), for financial periods beginning on or after 1 January 2015, which now apply to all companies and entities in the UK and Republic of Ireland other than listed groups

FRS 102 is a single financial reporting standard that applies to the financial statements of entities that are not applying EU-adopted IFRS or FRS 101 (part of new UK GAAP which contains disclosure exemptions from EU-adopted IFRS for qualifying entities). Small entities are now required to adopt FRS 102, although with reduced disclosure requirements, and small groups do not have to