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Business Criteria – IFRS 3

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Business Criteria – IFRS 3

  • This topic has 5 replies, 2 voices, and was last updated 4 years ago by Stephen Widberg.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • September 7, 2020 at 4:12 pm #583862
    selinciftci
    Member
    • Topics: 18
    • Replies: 9
    • ☆

    Hello All,

    My question is related to IFRS 3 Business Definition. Let’s say there is an entity sets of only one or similar groups assets and do not have any employee, but generates revenue due to outsourced management services. If another entity acquire it, Is this entity business or asset acquisition? IFRS 3 does not refer specificly to employee but processes. So I am not sure whether having employee is a must to have process.

    Thanks
    Selin

    September 8, 2020 at 8:11 am #584008
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3416
    • ☆☆☆☆☆

    IFRS 3 – business = An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers

    The scenario you describe is in essence a business

    September 8, 2020 at 9:22 am #584020
    selinciftci
    Member
    • Topics: 18
    • Replies: 9
    • ☆

    Thanks so much for the reply. What I try to understand is having employee must for being a business? I mean if an entity do not have employee but still generate output via outsource management services by using 1-2 asset , is it still a business?

    September 8, 2020 at 5:56 pm #584179
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3416
    • ☆☆☆☆☆

    Employees may be good evidence of a business. But we are supposed to interpret the standard in substance.

    IFRS 3 says that a process MAY have an organised workforce:

    he intellectual capacity of an organised workforce having the necessary skills and experience following rules and conventions MAY provide the necessary processes that are capable of being applied to inputs to create outputs.

    As always credit is given in the exam if you put down the definition of business. Everyone will have a different interpretation. As long as you know your definitions you will be fine.

    September 8, 2020 at 6:19 pm #584181
    selinciftci
    Member
    • Topics: 18
    • Replies: 9
    • ☆

    Thank you so much!

    September 9, 2020 at 9:21 am #584318
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3416
    • ☆☆☆☆☆

    My pleasure

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Business Criteria – IFRS 3’ is closed to new replies.

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