Question

When is a contingent liability recorded? a) When the amount car be reasonably estimated. b) When the future events are probable to occur and the amount can be reasonably estimated. c) When the future events are probable to occur. d) When the future events will possibly occur and the amount can be reasonably estimated.

Answer 1

Answer:

The answer is B.

Explanation:

Contingent liability is a liability that may occur in the future subject to the outcome of a specific event. The future outcome determines contingent liability. Examples of contingent liability are product warranties, pending court case etc.

So contingent liability should be recognized when the future events are probable to occur and the amount can be reasonably estimated