If there’s a specific amount for litigation claim, will it be classified as provisions or contingent...

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If there’s a specific amount for litigation claim, will it be classified as provisions or contingent...

If there’s a specific amount for litigation claim, will it be classified as provisions or contingent liabilities?

business accounting

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Answer 1

Answer #1

If there's a specific amount for litigation claim, It will be classified under contingent liabilities.

Under litigation or pending dispute, there is uncertainty about the crystallization of liability.

Whereas a provision is a liability which can be estimated. Thus, the obligation is present but we are unable to determine the exact amount of the obligation. Therefore in such cases, we make a provision for these nature of liabilities.

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Answer 2

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Is litigation claim classified under provisions or contingent liabilities?

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If there’s a specific amount for litigation claim, will it be classified as provisions or contingent...

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