Which one of the following would be considered a contingent liability?
A) A company owes $44,000 on inventories purchased on credit
B) A company has $980,000 worth of bonds outstanding
C) A company estimates that it will probably have to pay $48,000 to the Department of Environment Protection for a chemical spill
D) The company has access to a line of credit with a bank in the amount of $576,000
E) The company believes that it is reasonably possible it will lose a lawsuit but is unable to determine the possible damages

Question

Quizplus · Accepted Answer

For a liability to be a contingent liability, the amount must be able to be estimated and must be probable.

Which One of the Following Would Be Considered a Contingent