Two entities A Limited and B Limited together form a third entity, C Limited. C Limited acquires A Limited and B Limited. In this situation, AASB 3/IFRS 3 Business Combinations, adjudges that:
A) A Limited and B Limited cease to exist and C Limited is the acquirer.
B) the combined A Limited and B Limited, is the acquirer of C Limited.
C) C Limited is considered to be the acquirer.
D) C Limited is not to be considered to be the acquirer.

Question

Quizplus · Accepted Answer

Under AASB 3/IFRS 3 Business Combinations, when a new entity is formed to acquire two or more other entities, the new entity (C Limited in this case) is not considered to be the acquirer. Instead, the standard requires identification of one of the combining entities as the acquirer based on the terms of the combination and other factors.

Two Entities a Limited and B Limited Together Form a Third