contingent liability

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Contingent Liability

A liability that a company may have to pay, but only if a certain future event occurs. Usually, a contingent liability refers to the outcome of a lawsuit: that is, the company may have to pay a significant amount of money if it loses the lawsuit. Contingent liabilities are recorded under accounts payable; their existence may also affect the share price.

contingent liability

An obligation that may result, but is not likely to result because the event causing the obligation is improbable. For example, the award from a lawsuit against a firm is a contingent liability of the defendant if there is little likelihood the plaintiff will recover the award.

contingent liability

a liability which may or may not occur depending upon an uncertain event, for example, the outcome of a court case in which damages are being claimed against a firm.

contingent liability

A liability that is not currently a liability but may become one upon the happening of some future event.If a father guarantees the student housing lease of his son,then the son is liable for the rent but the father may become liable if the son defaults. Other common contingent liabilities are guarantees of the debts of others,potential adverse judgments in litigation,and currently contested tax liabilities or audits. Lenders sometimes request a list of all contingent liabilities when evaluating a borrower's financial strength.

References in periodicals archive ?
Under the supervision of the Court, the liquidator will establish a process for the identification, resolution and barring of claims and other contingent liabilities against ACE.
The ratings are constrained by the geopolitical risks that face all sovereigns in the region, the limited disclosure on the government's assets, and the contingent liabilities arising from the banking system and the public sector of the UAE as a whole.
The ratings are constrained by the geopolitical risks that face all sovereigns in the region, the limited disclosure on the government's assets, and growing contingent liabilities arising from the banking system and the public sector of the UAE as a whole.
Many taxpayers have been able to reduce their taxes in transactions involving contingent liabilities, leading Congress to change subchapter C and the Treasury Department to change the regulations under IRC section 752.
Roundtables for the proposed amendments to the recognition and measurement principles in IAS 37, Provisions, Contingent Liabilities and Contingent Assets, will be held during November and December; roundtables for the measurement phase of the Conceptual Framework project will be held in the first quarter of 2007.
Treasury issued final regulations on the assumption of contingent liabilities and proposed regulations on the tax effect to both partners and partnerships of the exchange of equity interests for services.
Llanto draws the attention of policymakers and legislators to the fiscal risk brought by the contingent liabilities arising from explicit or implicit government guarantees.
A]n estate will be considered terminated when all of the assets have been distributed except for a reasonable amount which is set aside in good faith for the payment of unascertained or contingent liabilities and expenses .
In reality, when assessing contingent liabilities, it is necessary to address and measure the probability of multiple outcomes.
To the extent that such accruals are not formally accounted for in the unified budget--as they generally are not--we create contingent liabilities that, under most reasonable sets of assumptions, currently amount to many trillions of dollars for social security benefits alone.
Companies most effected by environmental contingent liabilities include many Fortune 500 chemical, oil, gas and transportation firms.
Generally, contingent liabilities are not recognized until the contingency is eliminated and consequently contingent liabilities would not normally be included in determining the cost of acquisition or proceeds of disposition of an asset.