A contingent liability is a known obligation that is of an uncertain amount but that can be reasonably estimated.
A contingent liability is one that may arise as a result of the outcome of an uncertain future event. A contingent liability is recorded if the contingency is probable and the liability amount can be reasonably estimated. Unless both conditions are met, the liability may be disclosed in a footnote to the financial statements.
A contingent liability is a potential future liability, such as pending lawsuits or honoring product warranties. If the liability is likely to occur and the amount can be reasonably estimated, it should be recorded in a company's accounting records.
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