Question

What is a contingent liability and when does a company record that liability in its books?

Answer 1

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A contingent liability is a liability that may occur depending on the outcome of an uncertain future event. A contingent liability is recorded if the contingency is likely and the amount of the liability can be reasonably estimated....

Disclosing a Contingent Liability

A loss contingency that is probable or possible but the amount cannot be estimated means the amount cannot be recorded in the company's accounts or reported as liability on the balance sheet. Instead, the contingent liability will be disclosed in the notes to the financial statements...

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Answer 2

Answer:

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