Contingent Liabilities
► Contingent
liability depends on a future
event arising out of past events.
► To account for contingent losses:
▪ Record liability if it is probable and can be
reasonably estimated.
▪ Report the liability in the notes to the financial
statements (but do not record an entry) if it is
reasonably possible that a loss will occur.
▪ Do not report a contingent loss that is not likely
to occur.