When are contingent liabilities required to be recorded?

Question

Quizplus · Accepted Answer

According to accounting standards, a contingent liability must be recorded when it is both probable (meaning that there is more than a 50% chance that the liability will occur) and the amount can be reasonably estimated. If these conditions are not met, then the liability should be disclosed in the notes to the financial statements. However, once the liability becomes both probable and the amount can be reasonably estimated, it must be recorded in the financial statements.

When Are Contingent Liabilities Required to Be Recorded