Define what is meant by contingent liability. What three categories are used to clas- sify a contingent liability? Give four distinct examples of contingent liabilities

probable- the probability of the happening of the events in the future is high
Reasonably possible- the possibility of occurrence of the events is moderate, that is, neither too extreme, nor too low
Remote- the possibility of occurrence of the future events is much less

examples

• claims not acknowledged as debts
• warranties on product defects
• land disputes
• legal disputes