A contingent liability is recorded if it is probable and can be reasonably estimated.

Question

Quizplus · Accepted Answer

A contingent liability is only recorded on the balance sheet if it is both probable (meaning it is likely to occur) and the amount can be reasonably estimated. If either of these criteria is not met, the contingent liability may be disclosed in the footnotes of the financial statements, but it would not be recorded on the balance sheet.

A Contingent Liability Is Recorded If It Is Probable and Can