The Process of Contingent Liabilities Valuation for IFRS 3 Purposes

The article is focused on possible contingent liabilities valuation procedures. The first part of this article is concerned with necessity of contingent liabilities evaluation from the mergers, acquisitions and other business combinations point of view. It highlights possible negative effects arisen by ignoring the value of contingent liabilities. The second part of this article discuses suitable valuation methodology for contingent liabilities evaluation. The most attention is attracted by simulations and by Monte Carlo method. In the third part there is a practical example of contingent liability valuation. The process is present by using Monte Carlo methodology and by the support of Crystal Ball software.