BC15 The definition of a business combination in the revised standards provides that a transaction or other event is a business combination only if the assets acquired and liabilities assumed constitute a business (an acquiree), and Appendix A defines a business.

BC16 SFAS 141 did not include a definition of a business. Instead, it referred to EITF Issue No. 98‑3 Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business for guidance on whether a group of net assets constitutes a business. Some constituents said that particular aspects of the definition and the related guidance in EITF Issue 98‑3 were both unnecessarily restrictive and open to misinterpretation. They suggested that the FASB should reconsider that definition and guidance as part of this phase of the project, and it agreed to do so. In addition to considering how its definition and guidance might be improved, the FASB, in conjunction with the IASB, decided that the boards should strive to develop a joint definition of a business.

BC17 Before issuing IFRS 3, the IASB did not have a definition of a business or guidance similar to that in EITF Issue 98‑3. Consistently with the suggestions of respondents to ED 3, the IASB decided to provide a definition of a business in IFRS 3. In developing that definition, the IASB also considered the guidance in EITF Issue 98‑3. However, the definition in IFRS 3 benefited from deliberations in this project to that date, and it differed from EITF Issue 98‑3 in some aspects. For example, the definition in IFRS 3 did not include either of the following factors, both of which were in EITF Issue 98‑3: