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contingent liability

   Also found in: Legal, Wikipedia 0.01 sec.
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 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.



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NW Trading has a contingent liability of pounds 470,000 for rate charges which are under review.
Similarly, after a provision or contingent liability is recognized, the measurement of this obligation may be different under IFRS than under U.
338-7(e), Example 1 (satisfaction of contingent liability results in P's taking the liability into account as additional adjusted grossed-up basis)).
 
 
 
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