In IFRS 3, which step is part of identifying the acquirer in a business combination?

• A. Identify acquirer
• B. Negotiate employee bonuses
• C. Prepare tax filings
• D. Issue dividends

Answer: (A)

Identifying the acquirer is the first step in IFRS 3 because the accounting for a business combination hinges on which entity gains control. The acquirer is the entity that obtains control of the other combining entity, and this determination sets the basis for all subsequent accounting—consolidation of assets and liabilities, recognition of goodwill, measurement of consideration transferred, and how the transaction is presented in the financial statements. Control is not just about owning the largest share; it’s about the power to direct the relevant activities and to obtain benefits from them, which can be achieved through contractual arrangements or other rights as well as voting ownership.

The other activities listed—negotiating employee bonuses, preparing tax filings, or issuing dividends—are ordinary corporate or tax actions and do not define which entity is the acquirer under IFRS 3.