The following appeared in Centel Corporation's annual report:
"In December, an investor in the Argo group Inc (TAGI) filed suit against a subsidiary of the company for damages from alleged breach of fiduciary duty and negligence related to the bankruptcy of a subsidiary of TAGI. The company cannot predict the ultimate outcome of this action but believes it will not have a material effect on the company's financial position."
Is this a liability? How should it be reported? Why?
Yes this is a contingent liability because there is a breach of legal obligation. It should be ...
In a short paragraph, the response explains the disclosure and the impact to the company.