Contingent liabilities that are 'probable' and can be reasonably estimated are recorded on the balance sheet as a liability and as an expense in the income statement.

Question

Quizplus · Accepted Answer

Contingent liabilities that are both probable and can be reasonably estimated are indeed recorded on the balance sheet as a liability. Additionally, the corresponding expense is recognized in the income statement, reflecting the economic outflow or obligation that the entity expects to incur.

Contingent Liabilities That Are 'Probable' and Can Be Reasonably Estimated