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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
SelinIFRS 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
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?
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.
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