A contingent liability is recorded only if a loss is at least reasonably possible and the amount is reasonably estimable.A contingent liability is recorded only if a loss is probable and the amount is reasonably estimable.

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Quizplus · Accepted Answer

A contingent liability is recorded only if a loss is probable, meaning it is likely to occur, and the amount of loss can be reasonably estimated. If the loss is only reasonably possible, it is not recorded as a liability, but instead disclosed in the footnotes of the financial statements.

A Contingent Liability Is Recorded Only If a Loss Is