A contingent liability and an estimated liability are treated in the same manner for financial statement reporting purposes.

Question

Quizplus · Accepted Answer

A contingent liability is recognized in financial statements only if the liability is probable and the amount can be reasonably estimated, whereas an estimated liability is recognized when the amount is uncertain but can be reasonably estimated, leading to different treatment in financial statements.

A Contingent Liability and an Estimated Liability Are Treated in the Same