[Ganesan72]

Dear All,

What it is the meaning of the Contingent liability & Assest. Where it will appear in the balance sheet?

[ROLCAM]

Contingent Liability.
This a liability that might happen (become one) in the future.
The perfect example is the awarding of costs against you in a not yet finaliaed court case.

Contingent Asset.
This is an asset that may materialise in the future.
The perfect example is when losses are carried foeward , in those losses there is value , this value is in the Income Tax that
can be recuperated from the Tax Office in
the future.

Both the above items do NOT appear in the Balance Sheet itself, they are however shown
as NOTES TO THE BALANCE SHEET.

[morgaine300]

Both the above items do NOT appear in the Balance Sheet itself, they are however shown
as NOTES TO THE BALANCE SHEET.

That is obviously dependent upon where you are.

In the U.S. a tax loss carryover is recorded. Other gain continguencies (assets) are disclosed if a high probability exist for getting them. Meaning, usually no.

For loss contingencies (liabilities), they are recorded if its occurrence is both probable and can be reasonably estimated. A good example is warranty liabilities, but even a lawsuit would be recorded if it meets these requirements. (Though lawsuits can be pretty unpredictable, especially in terms of dollar amount.) If it's only somewhat likely but can be estimated, or if it's probable but can't be estimated, then it isn't recorded on the balance sheet but is disclosed in the notes. If it's not very likely, it doesn't even have to be in the notes. (There are certain exceptions to that.)