Which of the following liabilities is not contingent?
A) A liability to replace a specific defective television set already returned to the manufacturer
B) A liability to pay pension benefits if a specific employee lives to retirement
C) A liability to pay any adverse judgment for a product liability case currently on appeal
D) A liability to pay for books received by a college bookstore under terms that allow for the return for full refund of any books not sold

Question

Quizplus · Accepted Answer

A liability to replace a specific defective television set already returned to the manufacturer is not contingent because it is a known liability with a specific amount that can be measured and recognized on the balance sheet. Contingent liabilities are uncertain and their probability and amount cannot be reliably estimated. Choices B, C, and D are all examples of contingent liabilities because they are dependent on future events or outcomes.

Which of the Following Liabilities Is Not Contingent