Three conditions are required for a contingent liability to exist. Which of the following is not one of those conditions?
A) There is a potential future payment to an outside party or the impairment of an asset that resulted from an existing condition.
B) The outcome must be resolved by a third-party.
C) There is uncertainty about the amount of the future payment or impairment.
D) The outcome will be resolved by some future event or events.

Question

Quizplus · Accepted Answer

The third condition for a contingent liability to exist is that the outcome will be resolved by some future event or events, the first condition is that there is a potential future payment to an outside party or the impairment of an asset that resulted from an existing condition, and the second condition is that there is uncertainty about the amount of the future payment or impairment. The condition that the outcome must be resolved by a third-party is not necessary for a contingent liability to exist.

Three Conditions Are Required for a Contingent Liability to Exist