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Contingent Liability in a Subsidiay

This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.

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May 29, 2017 at 9:06 pm #388857
sunny20
Member
- Topics: 33
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Hi Mike,
Contingent Liability should not be recognised. But for a Consolidated Account, why Contingent Liability from a subsidiary can be recognised as Non-Current Liability?
For Example:
A subsidiary had a contingent liability with estimated fair value $500,000 at acquisition date 01 January 20X5. As at 31 December 20X5, the fair value of this liability had been
re-stimated at $300,000.
Many thanks
May 30, 2017 at 7:16 am #388900
MikeLittle
Keymaster
- Topics: 27
- Replies: 23200
Because we need to bring into the consolidation all those assets and liabilities, known and contingent, at their fair values as at the date of acquisition
It’s what we’re told to do by the IFRS and there’s no better reason for it than that!
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