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contingent liability

   Also found in: Wikipedia 0.02 sec.
Contingent Liability
1. The possibility of an obligation to pay certain sums dependent on future events.

2. Defined obligations by a company that must be met, but the probability of payment is minimal.

Notes:
1. A good example of a contingent liability would be an outstanding lawsuit.

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.


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Although in the past the government won a number of important victories in its ongoing attempt to stop abusive tax transactions, it has continued to lose on contingent liability transactions.
Denial of contingent liability loss deduction by Schnee, Edward J. / Journal of Accountancy
Now, under Statement 157, any contingent liability must be quantified, regardless of its probability.
New fair value standards stress how, not just what: Financial ... by Sinnett, William M. / Financial Executive
History of Contingent Liability Transactions Coltec was one of a series of cases in which the government challenged transactions involving the transfer of contingent liabilities and assets to a subsidiary followed by the sale of the subsidiary's stock.
The economic substance doctrine: sorting through the Federal ... by Kidder, Gregory N. / Tax Executive
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