This free, guided checker walks your finance team through the key decision points for IFRS 3 Reverse Acquisition Accounting. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
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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Reverse acquisitions typically arise when a private operating company merges into a public shell or legal parent with nominal operations; IFRS 3 applies when a business combination occurs.
Assess whether the transaction is an asset acquisition or another transaction type.
Official guidance: IFRS issued standards
Reverse acquisition indicators include the former shareholders of the operating entity receiving a majority of voting rights, the operating entity's board controlling the combined entity, and the operating entity's management continuing.
Apply standard IFRS 3 acquisition accounting with the legal acquirer as accounting acquirer.
Official guidance: IFRS issued standards
The accounting acquirer is usually the operating entity even when the legal parent is the issuing entity; evaluate relative size, fair value, and which party initiated the transaction.
Complete accounting acquirer identification before measuring the combination.
Official guidance: IFRS issued standards
Control is obtained when the exchange is completed and the accounting acquirer's shareholders hold the majority of voting rights in the combined listed or reporting entity.
Fix the acquisition date before initial measurement and consolidation.
Official guidance: IFRS issued standards
In a reverse acquisition, the legal parent issues shares; the fair value of those shares constitutes the consideration for measuring the combination from the accounting acquirer's perspective.
Measure issued equity at acquisition-date fair value before PPA.
Official guidance: IFRS issued standards
The legal acquirer often holds only cash and nominal assets; fair value the shell's assets and liabilities including any contingent obligations assumed by the combined entity.
Complete PPA on the legal acquirer's net assets before goodwill calculation.
Official guidance: IFRS issued standards
Goodwill in a reverse acquisition represents the premium paid for the listing or shell structure; a bargain purchase may arise when net assets of the legal acquirer exceed consideration.
Complete goodwill or bargain purchase calculation after PPA.
Official guidance: IFRS issued standards
Reverse acquisition presentation requires the accounting acquirer's historical financial information with equity restated to reflect the share exchange ratio; the legal parent's pre-acquisition results are not combined.
Restate comparatives to reflect reverse acquisition presentation rules.
Official guidance: IFRS issued standards
Earnings per share is calculated using the accounting acquirer's weighted average shares adjusted for the exchange ratio applied retrospectively to all comparative periods presented.
Restate share count and EPS for all comparative periods.
Official guidance: IFRS issued standards
Consolidation eliminates the legal parent's share capital and records the accounting acquirer's equity at the restated amounts reflecting the exchange ratio and combination adjustments.
Post consolidation elimination entries before issuing combined financial statements.
Official guidance: IFRS issued standards
Finalise IFRS 3 disclosures identifying the reverse acquisition, the accounting acquirer, and the basis of presentation for comparatives and EPS.
Recognise goodwill and apply reverse acquisition presentation and disclosures. Recognise bargain purchase gain after reassessment and apply reverse presentation.
Official guidance: IFRS issued standards
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