Accounting Dictionary

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Business Combination

Definition: Under international financial reporting standards, a business combination is a transaction in which the acquirer obtains control of another business (the acquiree). A business is an integrated set of activities and assets that can provide a return to investors in the form of dividends, reduced costs, or other economic benefits. A business typically has inputs, processes, and outputs. A development-stage entity may not yet have outputs, in which case you can substititute other factors, such as having begun operations and having plans to produce output, and having access to customers who can purchase the outputs.

A business combination is not the formation of a joint venture, nor does it involve the acquisition of assets that do not constitute a business.