Viewpoints: Asset acquisition versus business combination (Oil and gas)

Learn more about how an acquirer of an oil and gas property determines whether it meets the definition of a business under IFRS 3 Business Combinations and associated accounting implications.

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How do you know whether to apply IFRS 3 Business Combinations to your company's acquired oil and gas project? Viewpoints: Applying IFRS in the Oil and Gas Industry - Asset Acquisition Versus Business Combination discusses the factors to consider when analyzing if a project meets the definition of a business under IFRS 3 as well as the associated accounting implications.

Prepared by the Chartered Professional Accountants of Canada (CPA Canada), the Canadian Association of Petroleum Producers (CAPP) and the Explorers and Producers Association of Canada (EPAC), this essential resource for oil and gas companies discusses the guidance of IFRS 3 in an industry specific context.

You will learn

This document explains aspects of IFRS 3, and offers questions to help you determine whether the oil and gas property your organization has acquired is a business. Examples of questions includes:

  • Does the property have two essential elements: inputs and processes applied to those inputs?
  • What is the extent and significance of the acquired inputs?
  • To what extent does the acquired property have resources or reserves?
  • What is the extent and nature of the additional work to convert resources into reserves?