alette Inc. is being sued by a customer for $500,000 related to damages from the sale of defective products.  Legal counsel has advised Lapalette that there is a 70% likelihood that the company will be found liable; however, the normal settlement for this type of case is between $200,000 and $350,000, with payouts within this range equally likely.  Lapalette follows ASPE.  Based on this information, what amount should Lapalette record as a contingent liability? Question 5 options:   $275,000   $350,000   $200,000   $192,500

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.