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Hi,
I have a question concerning the contingent liability.
For example, if Company A acquired 80% of company B.
At the date of acquisition, company B had a contingent liability of for example, $100.
Then I wonder when we calculate the goodwill on acquisition, do we need to include the contingent liability? In my opinion, I think that because contingent liability will only be disclosed in FS note and has no effect to FS then it shouldn’t be included in goodwill calculation.
Please explain this problem.
Thank you so much.Hi,
In the individual accounts of the subsidiary then the contingent liability is disclosed in the notes to the accounts.
In the group accounts, the contingent liability is recognised at fair value.
Thanks
Hi,
And what about contingent assets? Do we include the contingent assets in subsidiary’s net assets for goodwill calculation?
Thanks
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