What is Contingent Liability?
Contingent Liability A potential obligation that may arise depending on the outcome of a future event, recognized in the notes to financial statements when not probable or measurable, and as a liability when probable and estimable, under IAS 37 and ASC 450.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Contingent Liability” Used in Practice?
A contingent liability is disclosed when a company is a defendant in a lawsuit and the outcome is uncertain at the reporting date.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Contingent Liability?
A potential obligation that may arise depending on the outcome of a future event, recognized in the notes to financial statements when not probable or measurable, and as a liability when probable and estimable, under IAS 37 and ASC 450.
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