10 June 2015
Suppose one litigation in custom was going on & company at initial level win the case so its a contingent liability. suppose the department goes to Tribunal & win the case then it has become Liability
11 June 2015
Dear Chintan Please understand that provision is made when there is a certain liability involved. A continent liability is not a real liability but may or may not become a liability in future. It'll depend on facts and circumstances.
11 June 2015
Thank You Very much for your valuable replies! So, Can it be summed up like this:
Liability More Probable to occur: PROVISION
Medium Probability : CONTINGENT LIABILITY
Less Probable : Neither Provision nor Contingent Liability
Example: What if it is more probable that the company is going to win the case and there is very less probability of losing? Should the Company still disclose contingent liability?
17 June 2015
Contingent liability is one which may or may not arise, in other words it is uncertain. The probability of the outcome does not matter. Disclosure is required even if there is 0.01% chance of liability arising.
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