Valdez Limited acquired a 25% interest in Alaska Pty Ltd on 1 January 2016. On 15 September 2016 it acquired an additional 10% interest, and on 15 March 2017 a further 40%. According to IFRS 3, a business combination occurs on:
A) 1 January 2016
B) 15 September 2016
C) 15 March 2017
D) All of the above

Question

Quizplus · Accepted Answer

A business combination occurs when an entity obtains control of one or more businesses. Control is the power to govern the financial and operating policies of an entity to obtain benefits from its activities. Valdez Limited did not obtain control of Alaska Pty Ltd until it acquired a 40% interest on 15 March 2017. Therefore, the business combination occurred on 15 March 2017 only.

Valdez Limited Acquired a 25% Interest in Alaska Pty Ltd