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Define a Contingent Liability and Give an Example

question 79

Essay

Define a contingent liability and give an example.How are they reported on the balance sheet?


Definitions:

Present Value

Present value is the current worth of a future sum of money or stream of cash flows, given a specified rate of return.

Future Value

The amount to which some current amount of money will grow if interest earned on the amount is left to compound over time.

Market Rate

The prevailing interest rate available in the marketplace, often influenced by factors like central bank rates, inflation, and the demand for and supply of credit.

ITQs

Individual Transferable Quotas, a type of fishing management tool allocating certain catch limits to fishermen or companies.

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