Contingent Liability
This query is : Resolved
20 November 2007
Advance bank gautantee taken and given to a client is it contingent laibility to a company?
is it should form notes on accounts under AS 29
is it should form notes on accounts under AS 29
S.Srinivasaraghavan
(Expert)
20 November 2007
Unless the possibility of any outflow in settlement is remote, an enterprise should disclose each class of contingent liability.(para 68 of the standard AS-29)
A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within th control of the enterprise.(para 10 of the standard As-29)
There is a possible obligation or a present obligation that may, but probably will not, require an out flow of resources.in the case of the counterguarantee given to the bank in consideration of guarantee issued by the bank. They will fall in this category. If so, disclosure alone is sufficient,no recognition is required.
A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within th control of the enterprise.(para 10 of the standard As-29)
There is a possible obligation or a present obligation that may, but probably will not, require an out flow of resources.in the case of the counterguarantee given to the bank in consideration of guarantee issued by the bank. They will fall in this category. If so, disclosure alone is sufficient,no recognition is required.
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