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

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nkamuni_mca  

  • Member Since Dec-2007 | Mar 10th, 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.

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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.

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chandu

  • Mar 28th, 2012
 

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

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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.

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