final accounts

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ankit singh

ankit singh (Querist)
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21 May 2010 what is the meaning of contigent liability ?

CMA.Palani Arumugam

CMA.Palani Arumugam (Expert)
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21 May 2010 Contingent liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case, Income tax appeals, Bank Guarantee etc.

This should be disclosed in the financial statement as part of the notes to accounts.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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21 May 2010 CONTINGENT LIABILITY is: (a) A possible obligation from past events that will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or (b) A present obligation from past events but is not recognized because (i) it is not probable that an outflow of resources will be required to settle the obligation; or (ii) the obligation cannot be measured reliably. Some examples: in corporate reports are pending lawsuits, judgments under appeal, disputed claims, and the like, representing potential financial liability.