Alert: Amendments to IFRS 3 - Reference to the Conceptual Framework (May 2020)

Date: May 14, 2020
Type: IFRS
Category: Alerts

Alert: Amendments to IFRS 3 - Reference to the Conceptual Framework (May 2020)


In May 2020, the International Accounting Standards Board (“IASB”) issued amendments which update an outdated reference in IFRS 3, Business Combinations (“IFRS 3”).


References in IFRS 3 to a superseded version of the Conceptual Framework for Financial Reporting (“Conceptual Framework”) have been updated to require an entity to refer to a later version issued in March 2018.

Also, an exception was provided for the IFRS 3 requirement that an entity refer to the Conceptual Framework to determine what constitutes an asset or a liability. The exception specifies that, for some types of liabilities and contingent liabilities, an entity applying IFRS 3 should instead refer to IAS 37, Provisions, Contingent Liabilities and Contingent Assets. The exception was added in order to avoid an unintended consequence of updating the reference. Certain entities would have had to recognize liabilities on the acquisition of a business that would not have otherwise been recognized, leading to the recognition of a gain on the derecognition of those same liabilities immediately after the acquisition.

Finally, IFRS 3 was amended to clarify that an acquirer should not recognize contingent assets acquired in a business combination.

The amendments are applicable to business combinations occurring in reporting periods beginning on or after January 1, 2022. Earlier application is permitted provided that the amendments issued by the IASB in March 2018, Amendments to References to the Conceptual Framework in IFRS Standards, are also applied.


The full history of the IASB’s project on Reference to the Conceptual Framework, including related supporting materials, can be accessed here.

The history of the AcSB’s corresponding project and related supporting materials can be accessed here.

This communication contains a general overview of the topic and is current as of May 14, 2020. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2020. All rights reserved.

Contact us

Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.