Contingent liability

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

Examples

• outstanding lawsuits
• Legal liability
• Liquidated damages
• Tort
• Bills Discounted with bank
• Unliquidated damages
• Destruction by Flood
• product warranty
• Income Tax Disputed
• Sales Tax Disputed