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What is contingent liability?
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Answer / rajesh sharma
contingent liability is the liability arrise after the
decision of other body, ie court case, decision of Taxation
department etc.
| Is This Answer Correct ? | 6 Yes | 4 No |
Answer / reena, mba
contingent liabilities are not the real liabilities. The happening and non happening of these liabilities are only decided by the future happening
ex- Bill Discounting.
| Is This Answer Correct ? | 3 Yes | 1 No |
Answer / sreenivasan.m.p
contingent liability is a potential liability…it depends
on a future event occurring or not occurring. For example,
if a parent guarantees a daughter’s first car loan, the
parent has a contingent liability. If the daughter makes
her car payments and pays off the loan, the parent will
have no liability. If the daughter fails to make the
payments, the parent will have a liability.
| Is This Answer Correct ? | 1 Yes | 0 No |
Answer / suresh
Contingent Liabilities are shown in Notes to Accounts or
under Explanatory items depending on where the BS is
prepared. In some western countries CL is shown under
Auditors report and as an explanation to a possible
liability payable in the next year or future years.
Mostly these are related to court law suits or patent
issues/drugs abuse cases etc.
Most of the CL are not given any value in the BS but a note
saying that a payment of $$$$ may fall due on a possible
liability of a law suite etc etc...
The liability that cannot be quantified correctly to the
final value....say a legal liability or a product warantee
but a possible payment that may arrise in future if not
covered fully under any insurance.
It's the responsibility of the Auditor and the
Finance/Accounts Dept to workout at the aprox value to be
shown in the notes to a/c as CL based on a rough estimate.
| Is This Answer Correct ? | 0 Yes | 0 No |
Answer / nitin
Contingent Liability is for sure liability if it happens,
if it did not happen there is no liability. However if it
happened it is treated as liability and shown in
liabilities section of Balance sheet.
Example:
Mr.L take loan from bank and make the guranter of loan to
Mr.G. Its fine if Mr.L returned loan to bank, suppose if he
fails to repay loan amount to bank then Mr.G need to pay
that loan amount. Hense it is liability for Mr.G
| Is This Answer Correct ? | 0 Yes | 1 No |
Answer / sultan raza
A contingent liability is a liability which a company has
to show in balance sheet and if that liability doesnt occur
in thew future then the company need not pay. For example
the Guarantees extended are Contingent Liabilitys. it
should be shown in the Notes to Accounts under the B/S
| Is This Answer Correct ? | 15 Yes | 19 No |
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