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Dear Sir
I would like to known how to adjust the contingent assets and liabilities in consolidation.
Regards
MinWhy adjust them? They will appear as liabilities / assets on the consolidated statement of financial position as at the value attributed to them on date of acquisition.
If there is an adjustment to be made that isn’t a reassessment within the first year, then that adjustment will be reflected as a credit or charge against consolidated profit or loss
If it IS a reassessment within the first year, the goodwill calculation will be affected (I suppose in that respect it’s similar to an adjusting subsequent event)
OK?
Thank you sir
I am confused that Dip IFR June 2007 question note 1. The contingent asset at the acquisition fair value is 3000. And the question said that subsequently won the case and so the model answer said it is charged to the RE. That is decreased RE. Why reduce RE? It is reduce asset and increase asset isn’t it?
I assume that at the acquisition date
Journal; Dr Asset Cr Pre acquisition reserveSubsequent adjustment is
Journal; Dr Cash. Cr AssetAm I right sir?
Regards
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