Contingent liability

Accounting

Historical cost Constant purchasing power Management Tax
Major types Auditing Cost Forensic Financial Fund Governmental
Auditing Financial Internal Firms Report
People and organizations Accountants Accounting organizations Luca Pacioli
Development History Research Positive accounting Sarbanes–Oxley Act
Business portal

Contingent liabilities are liabilities that may be incurred by an entity depending on the outcome of an uncertain future event such as a court case. These liabilities are not recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable as 'contingency' or 'worst case' financial outcome. A footnote to the balance sheet may describe 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, or not reasonably estimable. It may or may not occur.

Examples

Outstanding lawsuits
Claims against the company not acknowledged as debts
Legal liability
Liquidated damages
Tort
Unliquidated damages
Destruction by Flood
product warranty
Income Tax Disputed
Sales Tax Disputed
Financial guarantees given

This article is issued from Wikipedia - version of the Tuesday, June 23, 2015. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.