financial accounting

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Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2010 what is CONTINGENT LIABILITY MEANS

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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19 January 2010 As per Indian Accounting Standard 29

10.4 A contingent liability is:
(a) 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 the control of the enterprise;
or
(b) a present obligation that arises from past events but is not recognised because:
(i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
(ii) a reliable estimate of the amount of the obligation cannot be made.
10.5 A contingent asset is a possible asset that arises from past events the existence of which 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.

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2010 give one example

CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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19 January 2010 Suppose one party has made a claim against you for Rs. 1 crore which you don't acknowledge. In turn; he has approached to the court. Till the case is decided by the court (which may go into your favour or may not be); it is contingent liability.

Now answer me :

For whom it is contingent liability if the court is likely to pass order against the another party ?

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Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2010 the both the party will share equal liability. is this right answer?

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