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1. What Is a Contingent Liability

question 107

Essay

1. What is a contingent liability?
2. When must a contingent liability be recorded through a journal entry?
3. When should a contingent liability be disclosed in the footnotes to the financial statements?
4. When is disclosure of a contingent liability not required?


Definitions:

Common Law

A body of unwritten laws based on legal precedents established by the courts.

Coomer v. Kansas City Royals Baseball Corp.

A legal case that addressed the issue of spectator injuries at sporting events and the scope of liability for professional sports teams.

Hotdog Toss

A promotional or entertainment activity commonly seen at sports events where hotdogs are thrown or launched into the audience.

Reasonable Care

The level of care that an ordinary, prudent person would use in similar circumstances to avoid causing harm to others.

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