CHANGES IN IFRS 3 ACCOUNTING FOR BUSINESS COMBINATIONS: A FEEDBACK AND EFFECTS ANALYSIS

摘要

This research reviews the effect of IFRS (International Financial Reporting Standards) 3 with a focus on the changes in accounting procedures under business combinations. A content analysis research methodology was used to code and categories feedback data on the effects of IFRS as positive and negative. Results indicated that IFRS is considered successful by 71% of its users and unsuccessful by 29% of its users. IFRS success is credited to the enhancement of comparability of accounting information and streamlining of acquisition methods and goodwill under business combinations. Contrarily, IFRS is considered unsuccessful, because it is riddled with negative consequences, such as rising costs of compliance and preparation, especially in developing and less industrialized nations. We conclude that comparability of accounting information on an international scale is the most positive effect of IFRS 3, while increasing cost of compliance is the greatest negative effect of IFRS 3. We suggest that the International Accounting Standards Board (IASB), Financial Accounting Standards Board (FASB), and other bodies involved in setting global accounting standards should focus on finding ways to incentivize developing countries and companies to comply with the standards. We recommend further studies on ways to assist companies to reduce preparation costs resulting from IFRS changes.