A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense and a liability.

Question

Quizplus · Accepted Answer

This is the definition of a known and estimable contingent liability under Generally Accepted Accounting Principles (GAAP), which requires the liability to be recognized on a company's financial statements.

A Contingent Liability That Will Probably Become an Actual Liability