A contingent liability is recorded by making an appropriate journal entry if the likelihood of a loss is remote.

Name: A contingent liability is recorded by making an appropriate journal entry if the likelihood of a loss is remote.
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A contingent liability is only recorded if the likelihood of a loss is probable, and the amount of loss can be estimated with reasonable accuracy. If the likelihood is remote or uncertain, it is not recorded but disclosed in the footnotes of the financial statements.

A Contingent Liability Is Recorded by Making an Appropriate Journal