What are the three categories and circumstances used in classifying contingent liabilities?
What are the three categories and circumstances used in classifying contingent liabilities?
Homework Answers
The three categories of classifying contingent liabilities are :-
1) Probable:- those liabilities which are likely to occur means having more than 50% chances of occuring and also can be reasonably estimated prior to occuring are known as Probable contingent liabilities.
2) Possible:- those liabilities which are having not much less and not very high chances of occuring means they lie in between as they have not that much likely chances of occuring and also not that kuch that we can ignore them so we so them in the footnotes of the statement and are called Possible contingent liabilities.
3) Remote:- those liabilities which have such a lesser chances that they are not likely to be occur and are just a mere less than 1% chances . And hence seems to be impossible they are called Remote contingent liabilities.
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