Dear Professor,
both contingent consideration(payable to former shareholders i suppose) and contingent liability(of subsidiary) are to be multiplied with their respective probabilities before they are recorded.
True or False?
and if false then pls explain sir.
Many thanks
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contingent liability and consideration
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5y ago#1Both must be measured at FV, In recent exams this has involved multiplying the maximum liability by a percentage. Alternative they may give you the FV.
sir just in case FV given is different from the probability multiplying result then we choose FV?
5y ago#3The question will be very clear - you want the best estimate of FV. Be calm. :)
Hi sir,
Should we also gave to recognize a contingent liability based on the probability percentage?
Like for example a liability of 100 which has a 40% chance of payout. How to we use it in the FV of net asset at acquisition in the goodwill calculation?
5y ago#5I would recognise a contingent liability of 40. Read the question carefully and you will be fine. :)
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