What is Contingent Liabilities?

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  • Feb 13th, 2006

A contingental liability may or maynot be liability to the company. It is mandatory to show in Balance Sheet. Ex:- Exgratia payable to Workers.? Sometimes company has to pay, sometimes may not pay.


  • Feb 25th, 2006

A contingent liability is a liability which a company has to show in balance sheet and if that liability doesnt occur in thew future then the company need not pay.


  • Jul 31st, 2006

Contingent Liability is the liability which may occur or which may not occur ?in future.And it is shown in the foot note of the Balance Sheet.


  • Aug 20th, 2006

Contingent Liability is a liability wherein the outcome is unknown. For example the Guarantees extended are Contingent Liabilitys.


  • Nov 10th, 2006

Contigent liability is not the actual liability of business but it is written on the liability side of balance sheet.


  • May 15th, 2007

Contingent Liability is a liability which may or may not occur, but it should be shown in the Notes to Accounts.  It will not be a part of Balance Sheet.  we can say Disputed Liability of the co.,

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rama krishna, chirala

  • Jul 20th, 2007

Contingent liability may be a liability or not will be decided by the future actions of the organisation. that means future actions will decide an activity as liability or not for example : if the government policy regarding taxation is pending, the trader is not in a position to decide the exact amount of tax. In this case the trader will decide the total liability of tax after the decision is finalised.

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Pashu Pati Nath Pandey

  • Jul 27th, 2007

Absence of Forsa majoriea is one of the condition which may lead to contigent liability for a company.

its nothing but a treatment given to the balance sheet in order to nullify the effect of certain type of liability which originate and has not been supposed to happen under normal functioning of the organization.

for unforeseen event which give the immence pain?

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Ravi Gaonkar

  • Aug 9th, 2007

Contingent Liability is a liability which may or may not occur, but it should be shown in the Notes to Accounts.

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  • Aug 17th, 2007

Contingent Liability is a liability which may or may not occur in future, but it should be shown in the Notes to Accounts under the B/S.

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  • Oct 11th, 2007

Contingent LiabilitieSmeans occurence or nonoccurence in futrue. It will show in the Balance sheet Under foot note.  EX: Pending suit in Court

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vikas goswami

  • Oct 15th, 2007

Contingent liabilities may or may not arise, it depends upon particular situation . if it occurs liability arises , it does not occur liability does not arise. eg..
dividend payable to cumulative preference shareholder.

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khendup lepcha

  • Oct 24th, 2007

Contingent liability is not a actual liability but it has to be shown in the foot note of the balance sheet. It  may or may not occur in the future, if it is occur then only a company has to pay this liability. 

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  • Nov 2nd, 2007

Contingent means casual/accidental
for ex. there r 3 persons i.e. A,B & C.If 'B' borrowed some money from 'C' with the surety of 'A'.If in any case 'B' is not able to pay the amount then ' A' will be responsible for that amount coz he has given the surety for 'B'.

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  • Nov 8th, 2007

According to the Acounting dictionary, it is: 'A potential liability dependent upon some future event occurring or not occurring'
And you are right,  it is only shown as a footnote and not within the Balance Sheet

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  • Aug 18th, 2008

Contingent liabilities are those liabilities which are not liabilities as of now.

In future they may become liabilitites. They are called contingent because they are not real.

Example: A bank shows all bank guarantees it has issued as contingent liabililties in its balance sheet. Reason: those bank guarantees may be invoked and may actually become liability in some unknown date in future.

Contingent liabilities are mentioned in balance sheet and annual report. There is a solid reason for the same. Suppose any contingent liability becomes a real liability infutur then the stake holders in the company should not get surprised by sudden expense by the company.

Investors need to be informed of possible liabilities in future.


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  • Oct 20th, 2008

So, how does this transation affects the balance sheet?  Obviously it appears as a liability but what other area of the balance sheet does it affect?

e.g. Contingent liability for $3,000,000 appears as a liability.  Does this also have a contra entry under owners equity?  If so how is this displayed and why?

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  • Feb 26th, 2009

It may or may not be incurred by an entity depending upon the outcome of a future event such as a cout case. These liabilities are recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable. A footnote is the balance sheet describes the nature and extent of the contingent liabilities. The likelihood of loss is described as probable, reasonably possible, or remote. The ability to estimate a loss is described as known, reasonably estimable.

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  • Sep 6th, 2011

Contingent liability means which may or may not happens in future events.

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R.lydia sharmila

  • Nov 10th, 2011

Contingency liability is a liability which may or may not arises in future and not sure about the period which has to pay.

For example: if suppose a person failed to pay his bike due means a guardian has to pay... Then it won't be shown in balance of both the sides.it will be mentioned at foot note of the end of the balance sheet.

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Rohith H

  • Feb 21st, 2012

Contingent Liabilities is liabilities may or may not be accord by entity. It Depended up on out come of future Event.

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  • May 24th, 2012

Contingent liability is something which may or may not arise as the actual liability it depends upon the future event of the business.

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Shubhangi Dixit

  • May 28th, 2012

Contingent liability is not an actual liability so it is not shown in the balance sheet. If liability occurs in future than only it will be paid. But we have to show the contingent liability as a foot note after balance sheet.It does not affect the balance sheet.

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  • Jun 22nd, 2012

Contingent liability refers to liabilities which may or may not occur in the future. eg:court case

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  • Jul 9th, 2012

contingent liabilities are subjected to occurrence or not of a future event. Means a liability may be arise in future or not , it all depends on a future event. So these are not actual liabilities and shown as a foot note after balance sheet .

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