What is a method of measuring non-controlling interest (NCI) under IFRS 3?

Under IFRS 3, the measurement of non-controlling interest (NCI) can be conducted using the proportionate basis. This method involves measuring the NCI at its proportionate share of the identifiable net assets of the acquiree. This approach reflects the extent of the ownership interest held by the NCI in the acquiree's net assets, allowing for a clear representation of their stake in the overall financial position of the acquired entity.

Adopting the proportionate basis aligns with the conceptual framework of presenting fair values of the identifiable assets and liabilities acquired, ensuring that stakeholders understand the value attributed to both controlling and non-controlling interests. This method is particularly useful in providing insights into how the acquisition impacts the financial position of the acquiring entity relative to its proportion of ownership.

Other measurement bases, such as historical cost or yield approaches, do not adequately capture the current value of the NCI in the context of a business combination. Historical cost, for example, would not reflect the fair value of the NCI at the acquisition date, while yield approaches focus on income generation rather than the net asset valuation, making them less applicable for the purpose of measuring NCI in M&A transactions. Thus, the proportionate basis stands out as the most suitable and