What is the criteria for determining if a contingent liability needs to be reported on the...

What is the criteria for determining if a contingent liability needs to be reported on the financial statements? How is the value of a contingent liability determined?

Expert Solution

There are 2 conditions that are -

1. The value of Contingent Liability should be absolute hence the value should be reasonably certain or estimated

2. The value of contingent liability should be probable

Following contingent liability needs to be reported on the financial statements

The Value of contingent liability is determined on the basis factor involved.The company surveys all the factors which are in favour for them and which are infavourable for them hence a value is estimated that the company thinks in future may become its obligation to pay

ekkarill92 answered 2 years ago

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