Contingent Liability & Unethical Accounting Explained

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• Contingent Liability and Unethical situation

  The solution explains when a contingent liability is to be established and an example of a potentially unethical accounting situation.

• What is a CFE and what have they to do with Fraud?

  A contingent liability is a liability which is either reasonably probable, or probable that the company will have to pay.

• How to account for and report on contingent liabili

  Accounting standards dictate that contingent liabilities are recorded based on the likelihood of the incurrence of the future liability.

• Contingent Liability - Determine the probability of an event

  460365 Contingent Liability - Determine the probability of an event A contingent liability should be created if it probable that the liability will occur and the amount of the loss can be reasonably estimated.

• Discussion on contingent liability

  The website accountingcoach.com generally describes the topic as: In accounting, a contingent liability and the related contingent loss are recorded with a journal entry only if the contingency is both probable and the amount can be estimated.

• Report to investors in the annual report on firm's litigation risks

  If the chance of a contingent liability becoming a real liability is reasonably possible then financial statements should include a note for the contingent liability.

• This post addresses estimated current liabilities.

  If the contingent liability is classified as more than probable or likely, the contingent liability is then made at the estimated amount and reported as a current liability on the balance sheet.

• Contingencies in Financial Statements

  Liability for threatened litigation is a contingent liability should be recorded as contingent liability because if there is likelihood of events resulting in a loss then it should be recognized as contingent liability (as per statement no:5 of FASB rules

• Two types of current liabilities that must be estimated

  Contingent liabilities There are times when the existence of the liability is not fully certain.