Question

1. if a contingent liability is probable and the amount of the liability can be reasonably estimated, it is

Answer 1

A financial statement will contain the contingency if it is probable and the amount of liability is probable, the contingent obligation be added as a footnote to a financial statement.

In the financial statements, how are contingent liabilities handled?

A company's financial statements never include contingent liabilities. Although these duties have not yet materialized, they might do so in the future. Therefore, a contingent liability is not treated in an accounting sense. These contingent liabilities now need to be examined annually.

When should a company disclose contingent liabilities?

If a liability is conceivably feasible but not probable, or if a liability is probable but the amount cannot be estimated, disclose the presence of the liability in the notes to the financial statements.

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