Contingent liability
A contingent liability is a possible obligation confirmed by uncertain future events, or a present obligation not recognised because an outflow is not probable or cannot be measured reliably. It is normally disclosed unless the chance of outflow is remote. A present obligation with a probable outflow and reliable estimate is instead recognised as a provision.
Worked example
A legal claim with a possible but not probable payment usually needs a contingent-liability disclosure rather than a provision.
Common mistake
An uncertain amount does not automatically mean a contingent liability: provisions are liabilities with uncertain timing or amount.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | K1 | Direct | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |