Chapter 11, Problem 13RQ

To determine

Contingent liability:

A contingent liability is not an actual liability but a potential liability which may or may not convert into an actual liability on the occurrence or non-occurrence of an event. The contingent liabilities which are probable and the amount can be reasonably estimated are recorded in the books of accounts. If the contingency is not probable of occurring or the amount cannot be ascertained, then it will not be recorded in the books but will be disclosed in the notes to the accounts.

To explain:

The contingent liability with examples