FRS 6 Acquisitions and Mergers

FRS 6 (September 1994) (PDF)

Amendments to FRS 2, FRS 6 and FRS 28: Legal Changes (June 2009) (PDF)

FRS 6 was effective in respect of business combinations first accounted for in financial statements relating to accounting periods ending on or after 23 December 1994. The amended FRS took effect for accounting periods beginning on and/or after 6 April 2008, when the provisions of the Act/or the Regulations were applied to other entities (eg. limited liability partnerships), if later.​

It was withdrawn for accounting periods beginning on or after 1 January 2015, when FRS 102 became effective. 


FRS 6 sets out the circumstances in which the two methods of accounting for a business combination (acquisition accounting and merger accounting) are to be used. A business combination is the bringing together of separate entities into one economic entity as a result of one entity uniting with another or obtaining control over another entity's net assets and operations.

The ASB issued an amendment to FRS 6 in June 2009. The amendment updates the references in the FRS such that they correspond with the requirements set out in the Companies Act 2006 and the Large and Medium-sized Companies and Group (Accounts and Reports) Regulations 2008.

The objective of the FRS is too ensure that merger accounting is used only for those business combinations that are not, in substance, the acquisition of one entity by another but the formation of a new reporting entity as a substantially equal partnership where no party is dominant. To this end the FRS sets out five criteria that must be met for merger accounting to be used. When those five criteria are met merger accounting should be used. If those five criteria are not met then acquisition accounting should be used.

FRS 6 sets out the disclosures to be made under acquisition and merger accounting.