IASB Issued Narrow-scope Amendments to IFRS 10 & IAS 28

Previously, on 13 December 2012, IASB published for public comment ED/2012/6 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture (Proposed Amendments to IFRS 10 and IAS 28) (click here for the document). This Exposure Draft proposed narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) to address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution of a subsidiary. The main consequence of the proposed amendments is that a full gain or loss would be recognized on the loss of control of a business (whether it is housed in a subsidiary or not), including cases in which the investors retains joint control of, or significant influence over, the investee.

Within the ED, it said that the IASB proposed to amend IAS 28 (2011) so that :

1. the current requirements for the partial gain or loss recognition for transactions between an investor and its associate or joint venture only apply to the gain or loss resulting from the sale or contribution of assets that do not constitute a business, as defined in IFRS 3 Business Combinations; and
2. the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognized in full.

The IASB also proposed to amend IFRS 10 so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The consequence is that a full gain or loss would be recognized on the loss of control of a subsidiary that constitutes a business, including cased in which the investor retains joint control of, or significant influence over, the investee.

Later, on 11 September 2014, IASB issued narrow-scope amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011).

The amendments will be effective from annual periods commencing on or after 1 January 2016.

Subscribers to eIFRS can download the document of Sale or Contribution of Assets between an investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) from eIFRS

Determining Fair Values in Business Combination (based on IFRS 3)

The assets acquired and liabilities assumed in the business combination should be recorded at fair values. If the acquirer obtained a 100% interest in the acquired entity, this process is straightforward. If the cost exceeds the fair value of the net identifiable assets acquired, the excess is deemed to be goodwill, which should be capitalized as an intangible asset and tested periodically for impairment.

Determining Fair Values

Accounting for acquisitions requires a determination of the fair value for each of the acquired company’s identifiable tangible and intangible assets and for each of its liabilities at the date of combination (except for assets which are to be resold and which are to be accounted for at fair value less costs to sell under IFRS 5).

IFRS 3 provides illustrative examples of how to treat certain assets, particularly intangibles, but provides no general guidance on determining fair value. The Phase II revisions to IFRS 3, promised by iASB, are expected to provide more detailed guidance on this topic. A separate project on fair value measurements is likely to result in the issuance of a new IFRS on this topic, very likely to be heavily based on the recent US GAAP standard, FAS 157.

The list below in drawn from Appendix B of IFRS 3 :

1. Financial instruments traded in an active market – Current market values.

2. Financial instruments not traded in an active market – Estimated fair values, determined on a basis consistent with relevant price-earnings ratios, dividend yields, and expected growth rates of comparable securities of entities having similar characteristics.

3. Receivables – Present values of amounts to be received determined by using current interest rates, less allowances for uncollectible accounts.

4. Inventories

a) Finished goods and merchandise inventories – Estimated selling prices less the sum of the costs of disposal and a reasonable profit

b) Work in process inventories – Estimated selling prices of finished goods less the sum of the costs of completion, costs of disposal, and a reasonable profit

c) Raw material inventories – Current replacement costs.

5. Plant and equipment – At market value as determined by appraisal; in the absence of market values, use depreciated replacement cost. Land and building are to be valued at market value.

6. Identifiable intangible assets (such as patents and licenses) – Fair values determined primarily with reference to active market as per IAS 38; in the absence of market data, use the best available information, with discounted cash flows being useful only when information about cash flows which are directly attributable to the asset, and which are largely independent of cash flows from other assets, can be developed.

7. Net employee benefit assets or obligations for defined benefit plans – The actuarial present value of promised benefits, net of the fair value of related assets (Note that an asset can be recognized only to the extent that it would be available to the enterprise as refunds or reductions in future contributions).

8. Tax assets and liabilities – The amount of tax benefit arising from tax losses or the taxes payable in respect to net profit or loss. The amount to be recorded is net of the tax effect of restating other identifiable assets and liabilities at fair values.

9. Liabilities (such as notes and accounts payable, long-term debt, warranties, claims payable) – Present value of amounts to be paid determined at appropriate current interest rates, discounting is not required for short-term liabilities where the effect is immaterial.

10. Onerous contract obligations and other identifiable liabilities – At the present value of the amounts to be disbursed.

11. Contingent liabilities – The amount that a third party would charge to assume those liabilities. The amount must reflect expectations about cash flows rather than the single most likely outcome (Note that the subsequent measurement should fall under IAS 37 and In many cases would call for de-recognition. IFRS 3 provides an exception for such contingent liabilities, in that subsequent measurement is to be at the higher of the amount recognized under IFRS 3 or the amount mandated by IAS 37).

Source : Wiley IFRS 2008 : Interpretation and Application of International Accounting and  Financial Reporting Standards 2008

How IFRS 1 rules the accounting for Business Combinations ?

IFRS 1 First-time Adoption of International Financial Reporting Standards applies to an entity that presents its first IFRS financial statements. It specifies the requirement that an entity must follow when it first adopts IFRS as the basis for preparing its general-purpose financial statements. IFRS 1 refers to these entities as first-time adopter.

How IFRS 1 rules the financial statement presentation of business combination for an entity as the first-time adopter ?

A first-time adopter need not apply IFRS 3 Business Combinations retrospectively. Should it restate any business combination to comply with IFRS 3, then all later business combinations must also be restated.

A first-time adopter may elect not to apply IFRS 3 Business Combinations retrospectively to past business combinations (business combinations that occurred before the date of transition to IFRSs). However, if a first-time adopter restates any business combination to comply with IFRS 3, it shall restate all later business combinations and shall also apply IAS 27 (as amended in 2008) from that same date. For example, if a first-time adopter elects to restate a business combination that occurred on 30 June 20X6, it shall restate all business combinations that occurred between 30 June 20X6 and the date of transition to IFRSs, and it shall also apply IAS 27 (amended 2008) from 30 June 20X6 (IFRS 1 Appendix B par. B1).

Where a first-time adopter has accounted for a business combination as an acquisition and recognized an item as an intangible asset under IAS 38 Intangible Assets that item should be reclassified as goodwill.

The carrying amount of goodwill in the opening IFRS balance sheet should be its carrying value under previous GAAP adjusted for any intangible asset that does not meet the IAS definition and additional evidence that is now available with respect to any contingent purchase consideration. In addition, irrespective of whether there is any indication of impairment, IAS 36 Impairment of Assets should be applied to test the carrying value of goodwill at the date of transition.

Where previous GAAP required or permitted goodwill to be disclosed as a deduction from equity, it should not be recognized in the opening balance sheet, nor should the goodwill be transferred to the income statement on disposal of the subsidiary.

If under previous GAAP, the first-time adopter did not consolidate a subsidiary, but IFRS would require it to be consolidated the accounting treatment is as follows :

The carrying amounts of the subsidiary’s assets and liabilities should be adjusted to those required by IFRS. The deemed goodwill will equal the difference between the parent’s cost of investment in the subsidiary and its interest in those assets and liabilities.

An entity shall apply IFRS 1 if its first IFRS financial statements are for a period beginning on or after 1 January 2004.  Earlier application is encouraged  (IFRS 1 par. 47).

Identifying A Business Combination

IFRS 3 defined a business combination as 'the bringing together of separate entities or businesses into one reporting entity.'

In developing IFRS 3, the IASB considered adopting the definition of a business combination in SFAS 141. It did not do so because that definition excluded some forms of combinations encompassed in IAS 22 Business Combinations (which IFRS 3 replaced), such as those described in par. BC5 in which none of the former shareholder groups of the combining entities obtained control over the combined entity. Accordingly, IFRS 3 essentially retained the definition of a business combination from IAS 22.

An entity shall determine whether a transaction or other event is a business combination by applying the definition in this IFRS, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition. Paragraphs B5-B12 provide guidance on identifying a business combination and the definition of a business (IFRS 3 Business Combinations par. 3).

Identifying a business combination (application of paragraph 3)

This 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 :

1. by transferring cash, cash equivalents or other assets (including net assets that constitute a business);
2. by incurring liabilities;
3. by issuing equity interests;
4. by providing more than one type of consideration; or
5. without transferring consideration, including by contract alone (see paragraph 43).

A business combination may be structured in a variety of ways for legal, taxation or other reasons, which include but are not limited to :

1. one or more business become subsidiaries of an acquirer or the net assets of one or more businesses are legally merged into the acquirer;
2. one combining entity transfer its net assets, or its owners transfer their equity interests, to another combining entity or its owners;
3. all of the combining entities transfer their net assets, or the owners of those entities transfer their equity interests, to a newly formed entity (sometimes referred to as a roll-up or put-together transaction); or
4. a group of former owners of one of the combining entities obtains control of the combined entity.

(IFRS 3 Business Combinations par. B5 and B6).

Business Combinations of Entities under Common Control, how IFRS guide it?

IFRS 3 Business Combinations (as revised by January 2008) required a business combination transaction be accounted for by applying the acquisition method, unless it is a combination involving entities or business under common control.

IFRS 3 Business Combinations applies to a transaction or other event that meets the definition of business combination.

An entity shall determine whether a transaction or other event is a business combination by applying the definition in this IFRS, which requires that the assets acquired and liabilities assumed constitute a business. If the assets acquired are not a business, the reporting entity shall account for the transaction or other event as an asset acquisition.

This IFRS defines a business combination as a transaction or other event in which an acquirer obtains control of one or more business. Transactions sometimes referred to as ‘true mergers’ or ‘mergers of equals’ are also business combination as that term is used in this IFRS.

As mentioned above, this IFRS only applies to a transaction or other event that meets the definition of a business combination, and does not apply to: (a) the formation of a joint venture, (b) the acquisition of an asset or a group of assets that does not constitute a business, and (c) a combination of entities or business under common control

Business combinations of entities under common control

Paragraph B1-B4 of IFRS 3 provide guidance apply to business combinations of entities under common control.

Paragraph B1 stated that this IFRS does not apply to a business combination of entities or business under common control. A business combination involving entities or business under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory.

Following, paragraph B2 expressed that a group of individuals shall be regarded as controlling an entity when, as a result of contractual arrangements, they collectively have the power to govern its financial and operating policies so as to obtain benefits from its activities.

Therefore, a business combination is outside the scope of this IFRS when the same group of individuals has, as a result of contractual arrangements, ultimate collective power to govern the financial and operating policies of each of the combining entities so as to obtain benefits from their activities, and that ultimate collective power is not transitory.

Further, paragraph B3 stated that an entity may be controlled by an individual or by a group of individuals acting together under a contractual arrangement, and that individual or group of individuals may not be subject to the financial reporting requirements of IFRSs.

Therefore, it is not necessary for combining entities to be included as part of the same consolidated financial statements for a business combination to be regarded as one involving entities under common control.

Latest, paragraph B4 stated that the extent of non-controlling interests in each of the combining entities before and after the business combination is not relevant to determining whether the combination involves entities under common control.

Similarly, the fact that one of the combining entities is a subsidiary that has been excluded from the consolidated financial statements is not relevant to determining whether a combination involves entities under common control.

WILEY – IFRS 2008 Interpretation and Application of IFRS described that IFRS 3 explicitly does not apply to entities under common control (e.g., brother-sister corporations).

A question arises, however, when a parent (Company P) transfers ownership in one of its subsidiaries (Company B) to another of its subsidiaries (Company A) in exchange for additional shares of Company A.

In such an instance, A’s carrying value for the investment in B should be P’s basis, not B’s book value. Furthermore, if A subsequently retires the interests of minority owners of B, the transaction should be accounted for as a purchase, whether it is effected through a stock issuance by A or by a cash payment to the selling shareholders.

Furthermore, when a purchase transaction is closely followed by a sale of the parent’s subsidiary to the newly acquired (target) entity, these two transactions should be viewed as a single transaction. Accordingly, the parent should recognize gain or loss on the sale of its subsidiary to the target company, to the extent of minority interest in the target entity.

As a result, there will be a new basis (step-up) not only for the target company’s assets and liabilities, but also for the subsidiary company’s net assets. Basis is stepped up to the extent of minority participation in the target entity to which the subsidiary company was transferred (Hrd) ***

Business Combination Accounting, difference between Purchase and Pooling method

All business combinations are now, for accounting purposes under IFRS, considered to be acquisitions, whereby one entity (the parent) takes management control of another entity, or of its assets and liabilities. This is independent of the legal form of the business combination.

Thus, two entities may consolidate to create a new, third enterprise. Alternatively, one entity may purchase, for cash or for stock, the stock of another enterprise, which may or may not be followed by a formal merging of the acquired entity into the acquirer.

In yet other cases, one entity may simply purchase the assets of another, with or without assuming the debts of that enterprise. One enterprise may enter into an agreement for another to manage its assets and liabilities.

Pooling of Interests (Uniting of Interests)

Under this method of accounting for business combinations, the premerger book values of each combining entity’s assets and liabilities would simply be added together, with no re-measurement to fair value.

US GAAP eliminated pooling accounting outright (effective mid-2001) and the IASB followed suit, under IFRS 3, from early 2004.

(Business Combinations and Consolidated Financial Statements – WILEY IFRS 2008 Interpretation and Application)

Advanced Accounting Tex-book (Paul M. Fischer, William J. Taylor and Rita H. Cheng) described several major differences between pooling and purchases method of business combination accounting.

Asset valuation : under purchase accounting, assets are recorded at fair value, and goodwill may be recorded. Under pooling, assets were recorded at existing book value (which is generally lower than fair value), and no goodwill was created.

The advantage of pooling : (1) reported income is higher because depreciation expense is lower and there was no new goodwill amortization. (Goodwill was amortized over 40 years or less prior to FASB Statement No. 142); (2) return on assets is greater as a higher income is divided by a lower asset base.

Current-year income : under purchase accounting, the acquired firm’s income is added to the acquiring firm’s income statement starting on the purchase date. Under pooling, the acquired firm’s income was added as of the first day of the reporting period (no matter when the acquisition occurs).

The advantage of pooling : assuming that the acquired firm is profitable, the acquiring firm was able to include the acquired firm’s income, along with its own, for the entire year even if the pooling occurred on the last day of the reporting period.

Retained earnings : in a purchase, the acquired firm’s retained earnings cannot be added to that of the purchasing company. Under pooling, the retained earnings of the acquired firm were added to that of the acquiring firm (with some rare exceptions).

The advantage of pooling : (1) there was an instant increase in retained earnings, which made prior periods look more profitable; (2) prior-year income statements were retroactively combined, thus, the acquiring firm “pulled in” the income of the acquired firm in its prior-year statements.

Direct acquisition costs : in a purchase, these costs are added to the cost of the company purchased. They are typically included in goodwill, which used to increase goodwill amortization in later periods. Now these costs could increase impairment losses in future periods. In a pooling, these costs were expensed in the period of the purchase.

The advantage of pooling : income could have been higher on later periods, since there was no amortization of these costs. However, pooling income was decreased in the period of the acquisition, since these costs were expensed in the period of acquisition.

Total equity : in a purchase, the fair value of the shares issued to pay for the purchase must be added to the equity of the acquiring firm. In a pooling, the book value of the acquired firm’s equity was assigned to the shares issued by the acquiring firm.

The advantage of pooling : total equity was usually lower. Return on equity was greater, since a higher income was divided by a lower equity amount.

The financial statement advantages incurred by the pooling method and the increased “gaming” to use the pooling method led to its elimination in July 2001 with the issuance of FASB Statement No. 141 (Hrd) ***

Why Pooling of Interest Method was Eliminated from the Standard

In my previous article, I mentioned that Financial Accounting Standard Board (FASB) and the International Accounting Standard Board (IASB) have been working together to promote international convergence of accounting standards.

In March 2004, the IASB issued IFRS 3 Business Combinations which replaced IAS 22 and three others interpretations i.e. SIC-9, SIC-22 and SIC-28.

Further, in January 2008, the IASB issued a revised IFRS 3 as part of a joint effort by the IASB and US FASB to improve financial reporting while promoting the international convergence of accounting standards.

Previously, in June 2001, FASB issuing FASB Statement No. 141 Business Combinations which changed the method of accounting for business acquisitions by adopting the acquisition (purchase) method and eliminating the pooling of interests as an alternative.

In December 2007, FASB issued a revised standard, SFAS 141 (R), Business Combinations, and SFAS 160, Non-controlling Interests in Consolidated Financial Statements.

Prior to the issuance of FASB Statement No. 141 in 2001, there were two methods available to record the acquisition of a company. The primary method, applicable to most acquisitions, was the purchase method. And the second was the pooling of interest method.

Purchase accounting recorded all assets and liabilities at their estimated fair values. When the price exceeded the sum of the fair values for individual, identifiable assets, the excess was attributed to goodwill. Prior to July 2001, goodwill was amortized up to 40 years.

With the issuance of FASB Statement No. 142, Goodwill and Other Intangible Assets, goodwill is no longer amortized. It is now tested for, and if necessary, adjusted for impairment.

Under the pooling method, all assets and liabilities were transferred to the acquiring company at existing book values, and no goodwill could be created.

Purchase and poling were not meant to be alternative methods available for any acquisition. It was intended that pooling would apply only to a “merger of equals”. Toward this objective, in 1970, APB Opinion No. 16, Business Combinations, restricted the use of pooling to transactions that met a strict set of criteria.

The most important of the criteria required that 90 % of the acquired firm’s common stock shares be received in exchange for the acquiring company’s common stock. All shareholders had to be treated equally in the distribution of shares.

Over time, many business combinations were “managed” so that they would meet the pooling criteria. This meant that the acquiring company would receive the more favorable accounting treatment.

Several perceived advantages led firms to try to use the pooling method.

The financial statement advantages incurred by the pooling method and the increased “gaming” to use the pooling method led to its elimination in July 2001 with the issuance of FASB Statement No. 141.

The FASB held that fair values should be used in all combinations. The lack of comparability due to financial statement distortions, which resulted from companies using alternative methods, could no longer be tolerated.

Even before the statement was issued, companies were reluctant to use pooling.

In the fall of 1999, Tyco International was criticized for stimulating earnings growth through the use of the pooling method. This precipitated a significant decline in the value of Tyco’s shares.

Tyco later announced that it would no longer acquire companies as a pooling of interests.

Some foreign countries still allow the use of the pooling method when similar-size firms combine; it is difficult to determine the buyer versus the seller in such cases.

(Excerpt from Advanced Accounting Textbook - Paul M. Fischer, William J. Taylor and Rita H. Cheng)

Read for further references :

1. FASB Reconfirms Its Plans to Eliminate Pooling-of Interests Method of Accounting
2. Death to 'Pooling of Interests'?
3. Say Good-Bye to Pooling and Goodwill Amortization
4. Everyone Out of the Pool
5. Purchase and Pooling Headaches
6. Controversy continues over pooling of interest vs purchase accounting
7. Will elimination of pooling accounting reduce mergers and acquisitions?
   

IFRS 3 vs FASB 141 Business Combinations, the new reporting standards

IAS 22 Business Combinations was issued by the International Accounting Standards Committee in October 1998. It was a revision of IAS 22 Business Combinations (issued in December 1993), which replaced IAS 22 Accounting for Business Combinations (issued in November 1983).

In April 2001 the International Accounting Standards Board (IASB) resolved that all Standards and Interpretations issued under previous Constitutions continued to be applicable unless and until they were amended or withdrawn.

In March 2004 the IASB issued IFRS 3 Business Combinations. It replaced IAS 22 and three interpretations : SIC-9 (Business Combinations - Classification either as Acquisitions or Unitings of Interests), SIC-22 (Business Combinations - Subsequent Adjustment of Fair Values and Goodwill Initially Reported), SIC-28 (Business Combinations - "Date of Exchange" and Fair Value of Equity Instruments).

IFRS 3 was amended by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (issued March 2004).

In January 2008, the IASB issued a revised IFRS 3.

The revised International Financial Reporting Standard (IFRS) 3 Business Combinations is part of a joint effort by the International Accounting Standards Board (IASB) and the US Financial Accounting Standard Board (FASB) to improve financial reporting while promoting the international convergence of accounting standards.

Each board decided to address the accounting for business combinations in two phases. The IASB and the FASB deliberated the first phase separately.

The FASB concluded its first phase in June 2001 by issuing FASB Statement No. 141 Business Combinations. The IASB concluded its first phase in March 2004 by issuing the previous version of IFRS 3 Business Combinations.

The boards' primary conclusion in the first phase was that virtually all business combinations are acquisitions. Accordingly, the boards decided to require the use of one method of accounting for business combinations - the acquisition method.

The second phase of the project addressed the guidance for applying the acquisition method.

The boards decided that a significant improvement could be made to financial reporting if they had similar standards for accounting for business combinations. Thus, they decided to conduct the second phase of the project as a a joint effort with the objective of reaching the same conclusions.

The boards concluded the second phase of the project by issuing IFRS No. 3 and FASB Statement No. 141 (revised 2007) Business Combinations and the related amendments to IAS 27 Consolidated and Separate Financial Statements and FASB Statement No. 160 Noncontrolling Interests in Consolidated Financial Statements.

The IFRS replaces IFRS 3 (as issued in 2004) and comes into effect for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Earlier application is permitted, provided that IAS 27 (as amended in 2008) is applied at the same time.

(Source : IFRS 3 Business Combinations)

FASB Statement NO. 141 Business Combinations

As mentioned above, FASB and the IASB have been working together to promote international convergence of accounting standards.

In 2001, FASB's Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, changed the method of accounting for business acquisitions by adopting the acquisition (purchase) method and eliminating the pooling of interests as an alternative.

In specific areas in accounting for business acquisitions, however, convergence was not achieved.

As a result, in December 2007 FASB issued a revised standard, SFAS 141 (R), Business Combinations, and SFAS 160, Noncontrolling Interests in Consolidated Financial Statements.

The new standards significantly affect how consolidated financial statements are prepared when a Noncontrolling interest is present.

The CPA Journal in its July 2008 publication, revealed out this issue. Click here for the full story : New Reporting Standards for Noncontrolling Interests.

The 2008 Revised of IFRS 3 and IAS 27

This article was taken from Deloitte IAS Plus January 2008 edition.

On 10 January 2008, the International Accounting Standards Board (IASB) issued IFRS 3 (revised 2008) Business Combinations and IAS 27 (revised 2008) Consolidated and Separate Financial Statements. The revised Standards are mandatory for business combinations in annual financial statements beginning on or after 1 July 2009, although limited earlier application is permitted. The revisions will result in a high degree of convergence between IFRSs and US GAAP, although some inconsistencies remain, which may result in significantly different financial reporting.

The revised Standards promise significant change, including :

1. A greater emphasis on the use of fair value, potentially increasing the judgment and subjectivity around business combination accounting, and requiring greater input by valuation experts;

2. Focusing on changes in control as a significant economic event – introducing requirements to re-measure interests to fair value at the time when control is achieved or lost, and recognizing directly in equity the impact of all transactions between controlling and non-controlling shareholders not involving a loss of control; and

3. Focusing on what is given to the vendor as consideration, rather than what is spent to achieve the acquisition. Transaction costs, changes in the value of contingent consideration, settlement of pre-existing contracts, share-based payments and similar items will generally be accounted for separately from business combinations and will generally affect profit or loss.

The revised Standards resolve many of the more contentious aspects of business combination accounting by restricting options or allowable methods. As such, they should result in greater consistency in accounting among entities applying IFRSs.

The two revised Standards are mandatory for accounting periods beginning on or after 1 July 2009. In the case of IFRS 3, this will apply to business combinations in those periods. Early adoption is permitted provided that :

1. Both Standards are applied together;

2. The revised IFRS 3 is not applied in an accounting period beginning before 30 June 2007; and

3. Early adoption is disclosed.

Source : Deloitte IAS Plus - January 2008

Another resources :

1.  IASB - The revised IFRS 3 and amended IAS 27

2.  IAS Plus - Summaries of IFRS 3 Business Combinations