This free, guided checker walks your finance team through the key decision points for IFRS 3 Measurement Period Adjustments. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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The measurement period begins at acquisition date and ends when the acquirer receives information about acquisition-date facts or learns that no further information is obtainable, not to exceed one year.
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Official guidance: IFRS issued standards
IFRS 3 permits provisional fair values for items such as intangibles, contingent liabilities, and tax positions when initial measurement is incomplete at the first reporting date after acquisition.
No provisional amounts were recognised, so the retrospective measurement-period adjustment mechanism in IFRS 3.46 does not apply.
Official guidance: IFRS issued standards
Measurement-period adjustments relate only to information about conditions at acquisition date, such as finalized valuations, tax rulings, or litigation outcomes for pre-acquisition events.
Continue tracking provisional items until acquisition-date information is obtained or the measurement period ends (IFRS 3.45).
Official guidance: IFRS issued standards
Apply the crucial discriminating test: a measurement-period adjustment reflects new information about facts and circumstances that existed at the acquisition date, whereas a change driven by events after that date is not (IFRS 3.46-3.47). Trace the trigger for the change - a completed valuation, tax ruling, or litigation outcome on a pre-acquisition matter points to acquisition-date facts, while post-closing performance or a subsequent management decision does not. The common trap is pushing a favourable post-acquisition development back into goodwill instead of recognising it in profit or loss under IFRS 3.50.
Treat the change as a post-acquisition event outside the measurement period; recognise it in profit or loss under IFRS 3.50 or remeasure contingent consideration under IFRS 3.58.
Official guidance: IFRS issued standards
Measurement-period adjustments revise provisional amounts, goodwill, and comparative information in the period the adjustment is determined with effect as at acquisition date.
Apply the adjustment retrospectively to provisional amounts and goodwill as if known at the acquisition date (IFRS 3.49).
Official guidance: IFRS issued standards
Adjustments to provisional assets, liabilities, contingent consideration, and deferred tax generally offset to goodwill unless a bargain purchase was initially recognized.
Record the offset to goodwill, or a bargain purchase gain where goodwill is nil, for the change in the provisional amount (IFRS 3.48).
Official guidance: IFRS issued standards
Maintain a register of provisional PPA lines, information received, adjustment amount, and date to support audit and IFRS 3.61 disclosure of adjustments to provisional amounts.
Open a measurement-period log for every provisional item to support adjustment and disclosure (IFRS 3.B67(a)).
Official guidance: IFRS issued standards
IFRS 3 requires comparative information to reflect measurement-period adjustments as if known at acquisition date when the adjustment is identified in a subsequent reporting period.
Restate comparative information, including depreciation and amortisation effects, for the measurement-period adjustments (IFRS 3.49).
Official guidance: IFRS issued standards
Build the business combination note from the measurement-period log so that, for each item still provisional at the reporting date, it states the amount recognised and the reason the initial accounting was incomplete (IFRS 3.B67(a)). For adjustments recognised in the period, disclose the amount and the affected line items, and update the goodwill reconciliation (IFRS 3.B67(d)). The common trap is disclosing only the final figures without explaining why amounts were provisional or how the current period was affected by combinations recognised in earlier periods (IFRS 3.61).
Complete the provisional-amount and measurement-period adjustment disclosures in the business combination note (IFRS 3.61; IFRS 3.B67(a)).
Official guidance: IFRS issued standards
IFRS 3.50 requires changes after the measurement period to be recognized in profit or loss, such as remeasurement of liability-classified contingent consideration or correction of errors if applicable.
Post-period changes are correctly recognised in profit or loss, not against goodwill (IFRS 3.50). Reclassify the post-period adjustment out of goodwill and recognise it in profit or loss, correcting the error under IFRS 3.50 and IAS 8.
Official guidance: IFRS issued standards
Document the date the acquirer obtained all necessary information or the one-year anniversary, whichever is earlier, to close the measurement period for the combination.
The measurement-period adjustments are complete, goodwill and comparatives are updated, and disclosures are in place (IFRS 3.45; IFRS 3.B67(a)). Document the measurement period end date and close the provisional items register (IFRS 3.45).
Official guidance: IFRS issued standards
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