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• The formation of a joint venture
 

• Entities or businesses under common control
 

• Two or more mutual entities
 

• The formation of a reporting entity by contract alone without obtaining an ownership interest

• Separate entities or businesses coming together to form one reporting entity
 

• One entity, the acquirer, obtains control of one or more other entities, the acquiree

1. An acquirer must be identified for each business combination. The acquirer is one of the entities in the business combination that obtains control over the other entity (or entities) in the business combination. 
    
   
2. The cost of the business combination must be measured by the acquirer as the total of the fair values of assets given, liabilities assumed and equity instruments issued at the date of exchange, plus any directly attributable costs. When the cost of the combination is contingent on future events, the amount of this adjustment must be included in the cost of the business combination, if it is probable and reliably measureable.  
    
   
3. The acquirer allocates the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed at acquisition date.

• When the cost of a business combination is contingent on future events, the acquirer includes this amount in the cost of the business combination at acquisition date if it is probable and can be reliably measured, or as an adjustment to the cost of the combination if it becomes probable and is measured reliably subsequent to the acquisition date.
 
 

• Initial recognition by the acquirer at the acquisition date of the acquiree’s identifiable assets, liabilities and contingent liabilities is based on the following recognition criteria:
 
 

1. In the case of an asset other than an intangible asset - it is probable that any associated future economic benefits will flow to the acquirer, and its fair value can be measured reliably
 

2. In the case of a liability other than a contingent liability- it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and its fair value can be measured reliably
 

3. In the case of an intangible asset or a contingent liability - its fair value can be measured reliably.
 

• Initial measurement by the acquirer of the identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria must be at the fair values at the acquisition date, irrespective of the extent of any minority interest.
 
 

• Goodwill acquired in a business combination must be:  
   
  
  1. Recognised by the acquirer as an asset from the acquisition date
   
  
  2. Initially measured as the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities.
   
  
• Goodwill must be tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired, in accordance with AASB 136 Impairment of Assets. Amortisation is prohibited. 
   
  
• If the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities, and contingent liabilities exceeds the cost of the business combination, then:
 
 

1. The acquirer must reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination
 

2. Recognise immediately in the profit or loss any excess that remains after the reassessment.
 

• When a business combination is achieved in stages, each transaction is treated separately by the acquirer, using the cost of the acquisition and fair value information at each exchange date to determine goodwill. Any differences in fair values between each stage is accounted for as a revaluation.
 
 

• The initial accounting for a business combination can be determined provisionally by the end of the period but must be completed (with adjustments to the provisional values) within twelve months of the date of acquisition.
 
 

• Except for adjustments made due to finalisation of contingent consideration or recognition of deferred tax assets (see below), adjustments to the initial accounting once it has been completed can only be recognised as an error in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
 
 

• When a deferred tax asset of an acquiree subsequently satisfied the recognition criteria, the acquirer must recognise the benefit as income as per AASB 112 Income Taxes and recognise an expense for the reduction in goodwill.

• For business combinations effected during the reporting period, information includes:
• Names and descriptions of each entity or business
 

• Acquisition date
 

• Percentage of voting equity instruments acquired
 

• Cost of the combination and a description of the components of the cost, including information about the equity instruments issued
 

• Amounts recognised for each balance sheet item acquired
 

• The amount of excess recognised and description of factors that contributed to this, if any
 

• Description of the factors that contributed to recognition of goodwill, if any
 

• Amount of acquiree’s profit or loss since acquisition date, unless impracticable.
 

• For business combinations effected after reporting date but before the financial statements are issued, the same as above unless it is impracticable. If impracticable, disclose this and reason why.
 
 

• Various other disclosures also required, including a reconciliation of goodwill.