Acct Which of the Following Requires Recording for Contingent Liabilities
With a 60-day 3000 note bearing 5 annual interest. A provision is a liability of uncertain timing or amount. What Is A Contingent Liability Accounting Questions Answered The liability is probable and estimated to be 40000. . A past event has occurred but the amount of the present obligation if any cannot yet be determined. The outcome is probable and the potential liability can be estimated. To record a potential or contingent liability in the financial statements it needs to clear two basic criteria based on the probability of occurrence and its related value as discussed below. Other examples include guarantees on debts liquidated damages outstanding lawsuits. If the liability is likely to occur and the amount can be reasonably estimated the liability should be recorded in the accounting records. Replaced a 3000 account payable balance to Fiona Co. The liability may be a legal obligation or a constructiv...
