{
  "url": "https://openlegislation.uk/eu-regulation-2009-495/annex/appendix-B",
  "json_url": "https://openlegislation.uk/eu-regulation-2009-495/annex/appendix-B.json",
  "legislation": "eur/2009/495",
  "legislation_title": "Commission Regulation (EC) No 495/2009 of 3 June 2009 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards International Financial Reporting Standard (IFRS) 3 (Text with EEA relevance) (revoked)",
  "legislation_url": "https://openlegislation.uk/eu-regulation-2009-495",
  "path": "annex/appendix/B",
  "kind": "appendix",
  "number": "B",
  "heading": "Application guidance",
  "text": "This appendix is an integral part of the IFRS.\nBUSINESS COMBINATIONS OF ENTITIES UNDER COMMON CONTROL (APPLICATION OF PARAGRAPH 2(c))\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB1\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB2\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB3\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB4\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nIDENTIFYING A BUSINESS COMBINATION (APPLICATION OF PARAGRAPH 3)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB5\nThis IFRS defines a business combination as a transaction or other event in which an acquirer obtains control of one or more businesses. An acquirer might obtain control of an acquiree in a variety of ways, for example:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB6\nA business combination may be structured in a variety of ways for legal, taxation or other reasons, which include but are not limited to:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nDEFINITION OF A BUSINESS (APPLICATION OF PARAGRAPH 3)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB7\nA business consists of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business. The three elements of a business are defined as follows:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB8\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB9\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB10\nAn integrated set of activities and assets in the development stage might not have outputs. If not, the acquirer should consider other factors to determine whether the set is a business. Those factors include, but are not limited to, whether the set:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB11\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB12\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nIDENTIFYING THE ACQUIRER (APPLICATION OF PARAGRAPHS 6 AND 7)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB13\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB14\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB15\nIn a business combination effected primarily by exchanging equity interests, the acquirer is usually the entity that issues its equity interests. However, in some business combinations, commonly called ‘reverse acquisitions’ the issuing entity is the acquiree. Paragraphs B19–B27 provide guidance on accounting for reverse acquisitions. Other pertinent facts and circumstances shall also be considered in identifying the acquirer in a business combination effected by exchanging equity interests, including:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB16\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB17\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB18\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nREVERSE ACQUISITIONS\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB19\nA reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes on the basis of the guidance in paragraphs B13–B18. The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse acquisition. For example, reverse acquisitions sometimes occur when a private operating entity wants to become a public entity but does not want to register its equity shares. To accomplish that, the private entity will arrange for a public entity to acquire its equity interests in exchange for the equity interests of the public entity. In this example, the public entity is the legal acquirer because it issued its equity interests, and the private entity is the legal acquiree because its equity interests were acquired. However, application of the guidance in paragraphs B13–B18 results in identifying:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nMeasuring the consideration transferred\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB20\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nPreparation and presentation of consolidated financial statements\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB21\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB22\nBecause the consolidated financial statements represent the continuation of the financial statements of the legal subsidiary except for its capital structure, the consolidated financial statements reflect:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nNon-controlling interest\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB23\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB24\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nEarnings per share\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB25\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB26\nIn calculating the weighted average number of ordinary shares outstanding (the denominator of the earnings per share calculation) during the period in which the reverse acquisition occurs:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB27\nThe basic earnings per share for each comparative period before the acquisition date presented in the consolidated financial statements following a reverse acquisition shall be calculated by dividing:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nRECOGNISING PARTICULAR ASSETS ACQUIRED AND LIABILITIES ASSUMED (APPLICATION OF PARAGRAPHS 10–13)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nOperating leases\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB28\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB29\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB30\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nIntangible assets\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB31\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB32\nAn intangible asset that meets the contractual-legal criterion is identifiable even if the asset is not transferable or separable from the acquiree or from other rights and obligations. For example:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB33\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB34\nAn intangible asset that is not individually separable from the acquiree or combined entity meets the separability criterion if it is separable in combination with a related contract, identifiable asset or liability. For example:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nReacquired rights\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB35\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB36\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nAssembled workforce and other items that are not identifiable\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB37\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB38\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB39\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB40\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nMEASURING THE FAIR VALUE OF PARTICULAR IDENTIFIABLE ASSETS AND A NON-CONTROLLING INTEREST IN AN ACQUIREE (APPLICATION OF PARAGRAPHS 18 AND 19)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nAssets with uncertain cash flows (valuation allowances)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB41\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nAssets subject to operating leases in which the acquiree is the lessor\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB42\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nAssets that the acquirer intends not to use or to use in a way that is different from the way other market participants would use them\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB43\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nNon-controlling interest in an acquiree\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB44\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB45\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nMEASURING GOODWILL OR A GAIN FROM A BARGAIN PURCHASE\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nMeasuring the acquisition-date fair value of the acquirer’s interest in the acquiree using valuation techniques (application of paragraph 33)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB46\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nSpecial considerations in applying the acquisition method to combinations of mutual entities (application of paragraph 33)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB47\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB48\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB49\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nDETERMINING WHAT IS PART OF THE BUSINESS COMBINATION TRANSACTION (APPLICATION OF PARAGRAPHS 51 AND 52)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB50\nThe acquirer should consider the following factors, which are neither mutually exclusive nor individually conclusive, to determine whether a transaction is part of the exchange for the acquiree or whether the transaction is separate from the business combination:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nEffective settlement of a pre-existing relationship between the acquirer and acquiree in a business combination (application of paragraph 52(a))\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB51\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB52\nIf the business combination in effect settles a pre-existing relationship, the acquirer recognises a gain or loss, measured as follows:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB53\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nArrangements for contingent payments to employees or selling shareholders (application of paragraph 52(b))\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB54\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB55\nIf it is not clear whether an arrangement for payments to employees or selling shareholders is part of the exchange for the acquiree or is a transaction separate from the business combination, the acquirer should consider the following indicators:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nAcquirer share-based payment awards exchanged for awards held by the acquiree’s employees (application of paragraph 52(b))\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB56\nAn acquirer may exchange its share-based payment awards (replacement awards) for awards held by employees of the acquiree. Exchanges of share options or other share-based payment awards in conjunction with a business combination are accounted for as modifications of share-based payment awards in accordance with IFRS 2 Share-based Payment. If the acquirer is obliged to replace the acquiree awards, either all or a portion of the market-based measure of the acquirer’s replacement awards shall be included in measuring the consideration transferred in the business combination. The acquirer is obliged to replace the acquiree awards if the acquiree or its employees have the ability to enforce replacement. For example, for the purposes of applying this requirement, the acquirer is obliged to replace the acquiree’s awards if replacement is required by:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB57\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB58\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB59\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB60\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB61\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB62\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nOTHER IFRSS THAT PROVIDE GUIDANCE ON SUBSEQUENT MEASUREMENT AND ACCOUNTING (APPLICATION OF PARAGRAPH 54)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB63\nExamples of other IFRSs that provide guidance on subsequently measuring and accounting for assets acquired and liabilities assumed or incurred in a business combination include:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nDISCLOSURES (APPLICATION OF PARAGRAPHS 59 AND 61)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB64\nTo meet the objective in paragraph 59, the acquirer shall disclose the following information for each business combination that occurs during the reporting period:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB65\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB66\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB67\nTo meet the objective in paragraph 61, the acquirer shall disclose the following information for each material business combination or in the aggregate for individually immaterial business combinations that are material collectively:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nTRANSITIONAL PROVISIONS FOR BUSINESS COMBINATIONS INVOLVING ONLY MUTUAL ENTITIES OR BY CONTRACT ALONE (APPLICATION OF PARAGRAPH 66)\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB68\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\nB69\nThe requirement to apply this IFRS prospectively has the following effect for a business combination involving only mutual entities or by contract alone if the acquisition date for that business combination is before the application of this IFRS:\n. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .",
  "extent": "E+W+S+N.I.",
  "status": "repealed",
  "version": "current",
  "annotations": [
    {
      "type": "F",
      "label": "F1",
      "text": "Regulation revoked (31.12.2020) by The International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/685), reg. 1(2), Sch. 2 para. 13 (with reg. 20(2)) (as amended by S.I. 2020/335, regs. 1, 5); 2020 c. 1, Sch. 5 para. 1(1)"
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/eur/2009/495/annex/appendix/B",
    "retrieved_at": "2026-11-01T14:51:27.396572+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}