Answered: State with reason whether the following…

State with reason whether the following statements are true or false Contingent liability is an ascertained liability but its amount and due date are indeterminate

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 9Q: What are the two FASB required conditions for a contingent liability to be recognized?

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Question

State with reason whether the following statements are true or false Contingent liability is an ascertained liability but its amount and due date are indeterminate.

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

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