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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
Both 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?
The 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?
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