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Contingent liability is a liability that may be incurred by the entity depending on the outcome of an uncertain future event such as the result of a pending suit. This obligation is not recorded in the accounts of the company and displayed in the balance sheet when both are possible and reasonably predicted as a 'probable' or 'worst case' financial result. Footnotes for the balance sheet can illustrate the nature and level of contingent liabilities. The possibility of loss is described as a possible, reasonable possibility, or long distance. The ability to estimate losses is described as known, reasonably predicted, or can not be reasonably estimated. It may or may not happen.
Video Contingent liability
Example
- Great lawsuits
- Claims against the company are not recognized as debt
- Legal responsibility
- Dissolved Damage
- Tort
- Insufficient damage
- Destruction by Flood
- product warranty
- Disputed Income Tax
- Dispute Sales Tax
- Financial warranty is provided
Source of the article : Wikipedia
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