what is contigent liability and state some examples also.

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what is contigent liability and state some examples also...

Answer / souravaich

Contingent Liability is a liability which may or may not
occur, but it should be shown in the Notes to Accounts.
for example : if the government policy regarding taxation is
pending, the trader is not in a position to decide the exact
amount of tax. In this case the trader will decide the total
liability of tax after the decision is finalised.
another example : Guarantees extended are Contingent Liabilitys.

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what is contigent liability and state some examples also...

Answer / rajesh

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.
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.
Present obligation - an obligation is a present obligation
if, based on the evidence available, its existence
at the balance sheet date is considered probable,
i.e., more likely than not.
Possible obligation - an obligation is a possible obligation
if, based on the evidence available, its existence
at the balance sheet date is considered not probable.
A restructuring is a programme that is planned and controlled
by management, and materially changes either:
(a) the scope of a business undertaken by an enterprise;
or
(b) the manner in which that business is conducted.