Assume that auditors lost a civil lawsuit for damages and the court found total losses of $5million. If the auditors were determined to be 30 percent at fault and were the only solventdefendants, what is the auditors’ likely obligation under proportionate liability?a. $5,000,000.b. Zero.c. $2,250,000.d. $1,500,000.

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A: What is meant by Contingent Liabilities? When a company is having a possible obligation that is…

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A:

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A:

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Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.