Accounting › Section K · Current liabilities › Topic K.2
Contingent liabilities
A lawsuit not yet decided or a warranty not yet claimed may or may not cost the company money. US GAAP sorts such uncertain obligations by how likely they are and whether they can be measured, and that sorting decides whether they are recorded, disclosed or left out.
In this topic
- Debts that might happen
- What a contingency is
- Three levels of likelihood
- Record, disclose or ignore
- Measuring a probable loss
- Worked example: a lawsuit
- Warranties
- Worked example: dishwasher warranties
- Disclosure in practice
- IFRS: provisions
- Common mistakes to avoid
- Key takeaways
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