Chapter 11, Problem 11.23E

To determine

Contingent liability:  It is a potential liability of a company that depends on a future event. It is the result of an uncertain event. For paying a contingent liability, some event should happen in the future. The recording of contingent liability is based on the following likelihoods of the event occur in future:

• Remote
• Reasonably possible
• Probable

To identify: The accounting treatment for contingencies.