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P11-39. Describe the nature of contingent assets and liabilities (L.O. 11-3) (Medium - 10 minutes) Explain what contingencies
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Answer #1
  1. Contingencies means any uncertain event which may or may not occur in future. For example, a road accident, any legal suit filed on the company by an investor, etc.
  2. The contingent liabilities are not probable and its amount cannot be determined with substantial accuracy. This it is not recorded on the books of accounts but shown as a foot note on the balance sheet.
  3. The contingent assets are not probable and its amount cannot be determined with substantial accuracy. This it is not recorded on the books of accounts but shown as a foot note on the balance sheet
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