three white ceramic pots with green leaf plants near open notebook with click pen on top

Contingent liability – meaning

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by occurrence and nonoccurrence of one or more uncertain future events not wholly within the control of the entity, or a present obligation that arises from the past event but is not recognized because:

  • It is not probable that an outflow of resources embodying economic benefits will be required to settle the the obligation or
  • The amount of obligation cannot be measured with sufficient reliability

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