Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Contingent liability
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- November 23, 2023 at 10:43 pm #695359
1. Is it true that contingent consideration is a future liability that depends on the result of some event (or some condition) like a court case etc but the problem is that it is a liability of the subsidiary alone which will eventually reduce the net assets of subsidiary?
2. We will calculate the contingent liability based on computing expected value of probability to see how likely this event is to happen or succeed and based on the chance or likelihood we will record the liability in our financial statements (is that true?)
3. Can you please give me any example to fully comprehend the contingent liability?
4. The journal entry therefore would be:
Contingent expense (debit)
Contingent liability (credit)Contingent expense will be less from Group retained earnings whereas contingent liability will be less from net assets of subsidiary?
Is that all correct. Please explain. Thanks again!
November 23, 2023 at 11:28 pm #695361Your posting your questions on the FM forum
Shouldn’t they be on the FR tutor forum? - AuthorPosts
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