A contingent liability that will probably occur should be recorded in the accounts even though the amount cannot be reasonably estimated.

Question

Quizplus · Accepted Answer

A contingent liability should only be recorded in the accounts if both the occurrence of the liability is probable and the amount can be reasonably estimated. If the amount cannot be reasonably estimated, it should be disclosed in the notes to the financial statements, not recorded as a liability.

A Contingent Liability That Will Probably Occur Should Be Recorded