BC24 Both boards concluded that the acquisition method is the appropriate method of accounting for all business combinations in which one entity obtains control of one or more other businesses [In October 2012 the Board issued Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), which removed from the scope of IFRS 3 Business Combinations the acquisition by an investment entity, as defined in IFRS 10 Consolidated Financial Statements, of an investment in a subsidiary required to be measured at fair value through profit or loss.] because that method is consistent with how the accounting model generally accounts for transactions in which assets are acquired and liabilities are assumed or incurred. Therefore, it produces information that is comparable with other accounting information.

BC25 The acquisition method views a combination from the perspective of the acquirer - the entity that obtains control of the other combining businesses. The acquirer purchases or otherwise obtains control over net assets and recognises in its financial statements the assets acquired and liabilities assumed, including those not previously recognised by the acquiree. Consequently, users of financial statements are better able to assess the initial investments made and the subsequent performance of those investments and compare them with the performance of other entities. In addition, by initially recognising almost all of the assets acquired and liabilities assumed at their fair values, the acquisition method includes in the financial statements more information about the market’s expectation of the value of the future cash flows associated with those assets and liabilities, which enhances the relevance of that information.