Finance English
Analysis

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.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

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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