Contingent Liability

Why are contingent liabilities ever recorded—why not just wait until a lawsuit is settled? What accounting concepts apply to this situation?

Questions by sweets4u

Editorial / Best Answer

nkamuni_mca  

  • Member Since Dec-2007 | Mar 9th, 2010


Contingent Liability is the liability which may / may not occour in future... So, it is shown as notes rather then in balance sheet... Once, the liability become's real then it will recorded in books.

Showing Answers 1 - 1 of 1 Answers

seemasingh

  • Jun 22nd, 2009
 

Any enterprises should be disclosed present obligation arising out of event but not recgnised as provision.

nkamuni_mca 1268189428
  • Mar 9th, 2010

Contingent Liability is the liability which may / may not occour in future... So, it is shown as notes rather then in balance sheet... Once, the liability become's real then it will recorded in books.

  Was this answer useful?  Yes

chandu

  • Mar 28th, 2012
 

Contingent liability nothing but liability it will occur uncertain future events like product warranty.

  Was this answer useful?  Yes

GIRISH GARG

  • Sep 1st, 2014
 

Contingent liability is a liability that may or may not occur in future. It depends upon an event that will occur in future and can make a company liable to it. Example. when 2 cos A and B are in dispute with each other under a court of law. Now, depending upon the decision of the judge, both companies can create contingent liability but it is not recorded until, it occurs n reality. It is written as a note below the balance sheet. If court favors co. A than company B becomes liable and vice a verse. It is based on accrual system of accounting which says debit all the losses today, instead of future.

  Was this answer useful?  Yes

Give your answer:

If you think the above answer is not correct, Please select a reason and add your answer below.

 

Related Answered Questions

 

Related Open Questions