A contingent liability should be disclosed in the notes to the financial statements if there is a reasonable possibility that a loss (or expense)will occur.

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A contingent liability should be disclosed in the notes to the financial statements if there is a reasonable possibility that a loss (or expense) will occur. This requirement is stated in the accounting standards and is aimed at providing users of financial statements with information about potential future obligations and risks that the entity may face. If the likelihood of a loss or expense is remote, then disclosure may not be required. However, if the possibility of a loss or expense is more than remote but less than likely, then disclosure in the notes is necessary.

A Contingent Liability Should Be Disclosed in the Notes to the Financial