A Contingent liability is a liability or obligation which may or may not actually arise. It is a logical apprehension based on previous, present or future events/happening resulting into a liability or obligation to fulfil. A prudent recourse to such liabilities is to make a provision in the present time to perform such obligations successfully later on.
2007-03-27 21:48:12
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answer #1
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answered by helpaneed 7
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Contingent Liabilities are the possibilities of an obligation to pay a certain sum which is difficult to quantify and which may or may not occur.These are obligations triggered by a discrete but uncertain event. There for these liabilities are not recognized as Direct Liabilities.
for example, in the case of Government Guaranteed Loans, when the guarantee is entered into, there is no liability to the government,since this is contingent upon the borrower failing to repay the loan as contracted. How ever in the event of default the lender can invoke the guarantee and the government will be obliged to repay the amount of loan still outstanding. At that point the contingent liability will become the actual liability of the government and a payment must be made.
2007-03-28 09:01:07
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answer #2
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answered by Paul 2
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contigent liablities refers to those liablities which are in being disputed or pending legal proceedings. In the event of the proceeding goes against you then they will be treated as liablites for example tax disput with IRA
2007-03-28 04:22:33
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answer #3
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answered by ? 3
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they are liabilities which are estimated to happen but may not happen . like proposed interest rates . you r not sure if its a liability . but its uncertern value is written under contingent liabilities
2007-03-29 05:21:20
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answer #4
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answered by sharan 2
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Contingent derives from the word contingency. It means: unforeseen event, incident, emergency, possibility and eventuality.
2007-03-28 04:19:18
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answer #5
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answered by SGElite 7
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